The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, 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 from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
First Draw PPP Loan forgiveness terms
Usda Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8 to 24-week covered period following loan disbursement:
- The levels of compensation and employee pay are ensured
- The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
When all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can request forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 years of the date of expiration of the period covered and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers will begin making payment to their PPP lender.