The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. It also included conditions to encourage community banks to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue 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 on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Conditions for loan forgiveness
Public Servant Loan Forgiveness Form – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows the loan’s disbursement
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week time period after loan payment:
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.