The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The law required that the SBA release simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms in the initial draw of PPP loans
Ppp Loan Forgiveness Application Form 3508ez – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24-week period after the disbursement of loan:
- Pay and worker levels are ensured
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits go towards payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24-week time period after the loan’s disbursement
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can request forgiveness at any time prior to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive payment from their PPP lender.