The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus law.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the legislation being signed into law to simplify the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who had trouble getting loans last year.
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 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Pslf Loan Forgiveness Form – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24-week covered period following the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The proceeds from the loan may be used to pay expenses for payroll or other eligible expenses.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are used to pay for payroll expenses
- How to request loan forgiveness and the time to apply
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.