The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses that needed loans. The funds were used to mitigate the economic effects of the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain 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 released new forms.”
First Draw PPP Terms of loan forgiveness
Public Service Loan Forgiveness Employment Certification Form – For eligible borrowers First Draw PPP loans are eligible for loan forgiveness. This happens when the loan is disbursed within an 8– to 24-week period.
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of the funds go to payroll costs
- How and when to apply for loan forgiveness
After all loan funds have been utilized The borrower may apply for forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are able to receive the loan payment from their PPP lender.