The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The law required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
First Draw PPP Conditions for loan forgiveness
Public Student Loan Forgiveness Employment Verification Form – First Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24 week period that follows loan disbursement:
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness , and the time to apply
A borrower can apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been used. The borrower can request forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the end of the covered period and the loan is not renewed, PPP loans are no longer deferred, and borrowers will begin making monthly payments to their PPP lender.