The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being signed into law to simplify the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that struggled to get 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 hours of 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 Self-employed Application – For those who qualify, First Draw PPP loans are eligible to forgive loans. This applies when the loan is disbursed within an 8 to 24-week period.
- Employee and compensation levels are maintained
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness when the loan is repaid within an 8to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan funds could be used to cover payroll costs or other eligible expenses.
- At least 60% of the profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
When all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the end of the time period that was covered the PPP loans are no longer deferred and the borrower will be required to make payment to their PPP lender.