The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the application process for forgiveness, along with conditions meant to encourage more bank loans by community banks, particularly for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
Terms for forgiveness for the initial draw of PPP loans
Public Loan Forgiveness Form – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This is when the loan is disbursed within an 8– to 24-week period.
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– to 24 week time frame.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
- When and how do I apply for loan forgiveness?
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date of maturity. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.