The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the latest stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours from 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 the updated forms.”
First Draw PPP Conditions for loan forgiveness
Truth About Student Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24-week period after the disbursement of loan:
- The levels of compensation and employee pay are maintained
- The loan proceeds can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to cover payroll costs or other eligible expenses.
- At least 60% of profits go towards payroll costs
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 years of the last day of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make payment to their PPP lender.