The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the latest 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 deal with the financial fallout of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days of the legislation being approved by the lawmaker to streamline the application process for forgiveness, along with conditions meant to encourage more loans from community banks, especially 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 obligation to issue the one-page PPP form loan forgiveness within 24 hours from 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 more updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loans Being Forgiven – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24 week period that follows the loan’s disbursement
- The levels of compensation and employee pay are maintained
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan proceeds are used on payroll as well as other eligible expenses and
- At least 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness , and the time to apply
After all loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any point up to the date of maturity. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.