The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 hours after the legislation was signed into law to simplify the application process for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Loan forgiveness terms
Ppp Loan Forgiveness Application Form – For borrowers who are eligible First Draw PPP loans can be qualified to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- This is also true for pay and benefits for employees.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified customers are eligible for loan repayment when the loan is repaid within an 8to 24 week time frame.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of funds go to payroll costs
- How to apply for loan forgiveness , and when to apply
A borrower can apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan will be able to receive loan payments from their PPP lender.