The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours after the legislation was adopted to make the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
Forgiveness terms in the first draw of PPP loans
PPP Loan Forgiveness Short Form Instructions – For those who qualify, First Draw PPP loans can be suitable for loan forgiveness. This applies if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the pay and benefits for employees.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is paid within an 8– to 24 week time frame.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the funds go to expenses for payroll
- When and how do I apply for loan forgiveness?
When all of the loan proceeds have been used The borrower may apply to be forgiven. The borrower can request forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers must make monthly payments to their PPP lender.