The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who had trouble getting 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 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 new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Public Service Loan Forgiveness Ecf Form – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24 week period that follows the disbursement of loan:
- It’s the same for compensation and employees.
- The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is paid within an 8to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of the profits are used for the cost of payroll
- How to request loan forgiveness and when to apply
The borrower is eligible for forgiveness after all loan proceeds to which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any time until the loan’s maturity date. If they do not file for forgiveness within 10 months of the last day of the period covered and the loan is not renewed, PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.