The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses who had trouble 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 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Public Service Loan Forgiveness Form Fedloan – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8-to 24-week period after loan disbursement:
- It’s the same for employee compensation and the.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness when the loan is repaid within an 8to 24-week time frame.
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
- How do I request loan forgiveness and when to apply
Once all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months of the end of the covered period, then PPP loan payments are no longer deferred, and the borrower will be required to make payment to their PPP lender.