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 forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the latest 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 forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours 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 released new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness For Artists – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week period after the loan’s disbursement
- The levels of compensation and employee pay are ensured
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds are used to pay for payroll expenses
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 time period after loan payment:
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.