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 conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being signed into law to simplify the application process for forgiveness. It also included conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under 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.”
Forgiveness terms in the first draw of PPP loans
Student Loan Forgivness For Nurses – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week covered period following the disbursement of loan:
- This is also true for compensation and employees.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following loan payment:
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- At least 60% of funds go to payroll costs
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the last day of the period covered the PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.