The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Loan forgiveness terms
PPP Loan Forgiveness Form Under 50k – For those who qualify, First Draw PPP loans are qualified to be forgiven. This happens when the loan is disbursed within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is paid within an 8to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of profits go towards the cost of payroll
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.