The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 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 that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 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 published the updated forms.”
Forgiveness terms for the initial draw of PPP loans
Publiuc Loan Forgiveness Form – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This applies if the loan disbursement occurs within an 8– to 24-week period.
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment if the loan is paid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds can be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
- How do I request loan forgiveness and when to apply
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If they do not file for forgiveness within 10 months of the date of expiration of the period covered and the loan is not renewed, PPP loan payments can no longer deferred and the borrower will be required to make payment to their PPP lender.