The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses who struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Public Service Loan Forgiveness Cert Form – For borrowers who are eligible First Draw PPP loans can be eligible to be forgiven. This happens if the loan disbursement occurs within an 8– to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is repaid within an 8– 24-week time frame.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the proceeds are spent on payroll costs
- How to apply for loan forgiveness and the time to apply
A borrower can apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan are able to receive the loan payment from their PPP lender.