The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, as well as 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. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that had trouble 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 publish the one-page PPP form loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness For State Employees – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This happens if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the compensation and employees.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted 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
- Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the time period that was covered the PPP loans are no longer deferred, and the borrower will be required to make payment to their PPP lender.