The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage community banks to make more loans particularly to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
Terms for forgiveness for the first draw of PPP loans
PPP Loan Forgiveness Application One Page – For eligible borrowers, First Draw PPP loans can be qualified to forgive loans. This happens if the loan disbursement occurs within an 8 to 24 week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- How to apply for loan forgiveness and when to apply
When all of the loan funds have been utilized The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.