The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days 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 more updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Form – For eligible borrowers First Draw PPP loans are qualified to forgive loans. This is when the loan payment is made within an 8– to 24-week timeframe.
- This is also true for pay and benefits for employees.
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan proceeds are used on payroll as well as other eligible expenses and
- At least 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness and when to apply
When all of the loan proceeds have been used the borrower is eligible for forgiveness. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers must make payment to their PPP lender.