The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
Terms for forgiveness for the initial draw of PPP loans
PPP Loan Forgiveness Application Reddit – For borrowers who are eligible, First Draw PPP loans are qualified to be forgiven. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- At least 60% of funds go to payroll costs
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan will be able to receive payment from their PPP lender.