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 is also updated with new forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Student Loan Forgiveness Nc – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24 week period that follows the loan’s disbursement
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week time period after loan disbursement:
- 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 used on payroll costs and other expenses that are eligible and
- At least 60% of profits go towards expenses for payroll
- How do I apply for loan forgiveness and the time to apply
After all loan’s proceeds have been used, a borrower can apply for forgiveness. The borrower can request forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the end of the covered period and the loan is not renewed, PPP loans are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.