The U.S. Small Business Administration has released a 1-page form 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 latest stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions that would 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, said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was 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
Should Student Loans Be Forgiven – First Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24 week period that follows the disbursement of loan:
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week duration following loan disbursement:
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds could be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of profits are spent on payroll costs
- How do I apply for loan forgiveness and the time to apply
Once all of the loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.
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