The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being approved by the lawmaker to streamline the application process for forgiveness, along with conditions meant to encourage more loans from community banks, particularly for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 days of the date of enactment in 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.”
Forgiveness terms for the initial draw of PPP loans
Trump Tax Plan Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are eligible to be forgiven. This is when the loan payment is made within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is paid within an 8– to 24-week period.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the end of the covered period, then PPP loan payments are no longer deferred, and borrowers must make monthly payments to their PPP lender.