The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. It also included conditions to encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
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 the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Proposals – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24-week period after the loan’s disbursement
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week time period after loan payment:
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds are used on payroll costs as well as other eligible expenses and
- A minimum of 60% of profits are spent on payroll costs
- What is the best time to apply for loan forgiveness?
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.