The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the procedure of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days 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 new forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Bankruptcy – For eligible borrowers, First Draw PPP loans are suitable for loan forgiveness. This is when the loan payment is made within an 8 to 24 week period.
- This is also true for compensation and employees.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds 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 8to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
- How do I apply for loan forgiveness and when
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been utilized. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the last day of the time period that was covered the PPP loan payments can not deferred any longer, and borrowers must make payment to their PPP lender.
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