The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was 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 last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours 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 issued more updated forms.”
First Draw PPP Loan forgiveness terms
Public Service Loan Forgiveness Employer Form – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8 to 24-week period after loan disbursement:
- The levels of compensation and employee pay are maintained
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of funds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is paid within an 8– to 24-week period.
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The proceeds of the loan can be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.