The U.S. Small Business Administration released a one-page form that aims to simplify the application process for the forgiveness of 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 plan last month and included $284 billion of financing to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. The law required that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. It also included conditions that would encourage banks in the community 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 one-page form for PPP loan forgiveness within the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Loan forgiveness terms
Public Service Loan Forgiveness Application For Forgiveness – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for pay and benefits for employees.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of funds go to the cost of payroll
- When and how do I apply for loan forgiveness
After all loan funds have been utilized the borrower is eligible for forgiveness. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are able to receive payment from their PPP lender.