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 latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being adopted to make the application process for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote 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 on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms in the first draw of PPP loans
PPP Loan Forgiveness Application Keybank – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The loan funds could be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of profits go towards payroll costs
- How to apply for loan forgiveness , and the time to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the end of the period covered, then PPP loan payments can no longer deferred and borrowers must make payment to their PPP lender.