The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised 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 financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned companies that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loan Forgiveness Laws – For those who qualify First Draw PPP loans can be suitable to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week period.
- Employee and compensation levels are kept at a constant level.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of funds go to expenses for payroll
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the end of the period covered, then PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.