The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage community banks to lend more specifically to minority-owned companies that had difficulty 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 publish 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 released more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Student Loan Forgiveness Form 2015 – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness within the 8 to 24-week covered period following the loan’s disbursement
- The same goes for the pay and benefits for employees.
- The loan funds are used 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 given to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week time period after the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The proceeds of the loan could be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are used to pay for payroll expenses
- How do I apply for loan forgiveness , and when to apply
Once all of the loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers can request forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.