The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote 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 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 more updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Defrauded – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24 week period that follows the loan’s disbursement
- This is also true for compensation and employees.
- The loan proceeds are spent on payroll and other eligible expenses; and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan funds could be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
- How do I request loan forgiveness and when to apply
When all of the loan proceeds have been used, a borrower can apply for forgiveness. The borrower can request forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the period covered the PPP loan payments are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.