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, along with newly updated and revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. It also included conditions to encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms in the first draw of PPP loans
Us Department Of Education Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans can be qualified to be forgiven. This applies when the loan payment is made within an 8 to 24-week period.
- Employee and compensation levels are ensured
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness if the loan is paid within an 8– to 24-week period.
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds could be used to cover expenses for payroll or other eligible expenses.
- At least 60% of profits go towards expenses for payroll
- How to apply for loan forgiveness , and the time to apply
The borrower is eligible 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 loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the end of the period covered the PPP loan payments are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.