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, as well as newly updated and revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the procedure of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days 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 issued new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Universal Technical Institute Student Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness within the 8-to 24 week period that follows loan disbursement:
- Employee and compensation levels are ensured
- The proceeds from the loan may be used to pay payroll costs or other eligible expenses.
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan funds could be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits are used to pay for payroll expenses
- How and when to apply for loan forgiveness?
A borrower can apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. 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 end date of the loan are able to receive loan payments from their PPP lender.