The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours 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 issued new forms that were updated.”
Forgiveness terms in the first draw of PPP loans
What Is A Ppp Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be suitable to be forgiven. This applies when the loan payment is made within an 8– to 24-week period.
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8to 24-week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness , and when
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower is requesting forgiveness have been used. The borrower can request forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan will be able to receive payment from their PPP lender.