The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Loan forgiveness terms
Public Worker Student Loan Forgiveness – For eligible borrowers First Draw PPP loans can be suitable to be forgiven. This happens when the loan is disbursed within an 8– to 24-week period.
- This is also true for pay and benefits for employees.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of profits go towards payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is paid within an 8to 24 week time frame.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of proceeds go to the cost of payroll
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any time up to the date of maturity. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the period covered the PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.