The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. The legislation required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. It also included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours of 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 published updated forms.”
First Draw PPP Terms of loan forgiveness
PPP Loan Forgiveness Form 3508ez Example – For borrowers who are eligible First Draw PPP loans can be qualified to be forgiven. This applies if the loan disbursement occurs within an 8 to 24 week period.
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to pay payroll costs or other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds could be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. 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 month after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.