The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The law required that the SBA provide simplified forms within 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said 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 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 issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Public Service Loan Forgiveness Form 2015 – For those who qualify, First Draw PPP loans are eligible to forgive loans. This is if the loan disbursement occurs within an 8 to 24-week period.
- This is also true for compensation and employees.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan funds could be used to cover payroll costs or other eligible expenses.
- At least 60% of the profits are used to pay for payroll expenses
- How do I request loan forgiveness and when to apply
After all loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the loan’s maturity date. If they do not file for forgiveness within 10 years of the end of the covered period, then PPP loan payments are not deferred any longer, and borrowers must make monthly payments to their PPP lender.