The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment in 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 additional updated forms.”
First Draw PPP Terms of loan forgiveness
What Is A Forgivable Loan With Mortgage – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- This is also true for pay and benefits for employees.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week time period after loan payment:
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
When all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are able to receive loan payments from their PPP lender.