The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The legislation required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours of the date of the enactment of 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.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Official Site – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if within the 8 to 24-week period after the loan’s disbursement
- Pay and worker levels are ensured
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is repaid within an 8– 24-week period.
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits are spent on payroll costs
- How do I apply for loan forgiveness and when to apply
After all loan proceeds have been used the borrower is eligible to be forgiven. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the period covered the PPP loan payments are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.