The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days 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 published new forms.”
Terms for forgiveness for the initial draw of PPP loans
Student Loan Forgiveness For Students With Disabilities – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This happens when the loan payment is made within an 8 to 24-week timeframe.
- Pay and worker levels are maintained
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8to 24-week time frame.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to payroll costs
- How and when to apply for loan forgiveness?
When all of the loan funds have been utilized, a borrower can apply for forgiveness. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are able to receive payment from their PPP lender.