The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help 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 approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote 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 published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Program Form – For borrowers who are eligible, First Draw PPP loans can be eligible for loan forgiveness. This happens when the loan payment is made within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is paid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
After all loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.