The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus epidemic. The legislation required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
Forgiveness terms in the first draw of PPP loans
Student Loan Forgiveness For Nonprofit Employees 2022 – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are maintained
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness , and when
When all of the loan funds have been utilized the borrower is eligible for forgiveness. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers will begin making monthly payments to their PPP lender.