The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the latest stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP 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 issued new forms that were updated.”
Forgiveness terms in the initial draw of PPP loans
Student Loan Forgiveness Michigan Nonprofit – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24-week covered period following loan disbursement:
- Employee and compensation levels are ensured
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- A minimum of 60% of the proceeds are spent on payroll costs
- How to request loan forgiveness and the time to apply
After all loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the last day of the covered period the PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.