The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days from 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 issued additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness 50k – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week period after the disbursement of loan:
- Pay and worker levels are ensured
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– 24-week time frame.
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds could be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
- How to apply for loan forgiveness and the time to apply
When all of the loan 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 don’t request forgiveness within 10 month of the expiration date of the loan will be able to receive loan payments from their PPP lender.