The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the legislation being adopted to make the application process for forgiveness. It also included 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 stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 days of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness Income – For borrowers who are eligible, First Draw PPP loans are qualified for loan forgiveness. This happens when the loan payment is made within an 8 to 24-week timeframe.
- Employee and compensation levels are ensured
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds can be used to pay payroll costs or other eligible expenses.
- At least 60% of the profits are spent on payroll costs
- How do I request loan forgiveness and when
Once all of the loan funds have been utilized The borrower may apply for forgiveness. The borrower can apply for forgiveness at any time up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive payment from their PPP lender.