The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The law required that the SBA release simplified forms within the first 24 hours of the signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that 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 stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
Forgiveness terms in the initial draw of PPP loans
Vcu Student Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24-week covered period following the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are eligible for loan repayment if the loan is paid within an 8– to 24-week time frame.
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of the proceeds are used for the cost of payroll
- How to apply for loan forgiveness , and when
A borrower may apply for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the covered period and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers must make monthly payments to their PPP lender.
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