The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days of the legislation being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, particularly for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Forgiveness terms for the first draw of PPP loans
PPP Loan Forgiveness Application Webinar – For those who qualify, First Draw PPP loans can be eligible to be forgiven. This applies when the loan is disbursed within an 8– to 24-week period.
- This is also true for employee compensation and the.
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week covered period following loan payment:
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers must make payment to their PPP lender.