The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 hours of the bill being signed into law to simplify the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, especially for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Loan forgiveness terms
Ppp Loan Forgiveness Requirements – First Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24-week period after the loan’s disbursement
- This is also true for pay and benefits for employees.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week covered period following loan payment:
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of profits are spent on payroll costs
- How to request loan forgiveness and when
Once all of the loan funds have been utilized The borrower may apply to be forgiven. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.