The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP 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 published new forms that were updated.”
Terms for forgiveness for the initial draw of PPP loans
What Is A Forgivable Loan Program – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This applies when the loan is disbursed within an 8– to 24-week timeframe.
- It’s the same for employee compensation and the.
- The loan funds are used on payroll costs and other eligible expenses; and
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits go towards payroll costs
- How to apply for loan forgiveness and when
When all of the loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.