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. The form is also updated with new forms that comply with the current stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions that encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 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 published new forms.”
First Draw PPP Loan forgiveness terms
Registered Nurse Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible to forgive loans. This is when the loan payment is made within an 8– to 24 week period.
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week duration following loan payment:
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of funds go to payroll costs
- How and when to apply for loan forgiveness?
When all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can request forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the end of the covered period, then PPP loan payments can no longer deferred and borrowers must make payment to their PPP lender.