The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing for small-scale businesses who needed loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Bill 2022 – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24-week covered period following the disbursement of loan:
- Pay and worker levels are maintained
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds go to the cost of payroll
- How to request loan forgiveness and when to apply
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.