The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The law required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to lend more specifically to minority-owned companies who were unable to obtain 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 updated forms.”
Terms for forgiveness for the first draw of PPP loans
Sallie Mae Public Service Loan Forgiveness Form – For borrowers who are eligible, First Draw PPP loans can be qualified to be forgiven. This is when the loan is disbursed within an 8– to 24-week period.
- The same goes for the employee compensation and the.
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8– to 24 week period.
- Pay and worker levels are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loans are no longer deferred, and borrowers must make loan payments to their PPP lender.