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 is also updated with new forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours of the signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions to encourage community banks to make more loans particularly to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours of 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 additional updated forms.”
First Draw PPP Conditions for loan forgiveness
What Public Service Jobs Qualify For Student Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24 week period that follows loan disbursement:
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24-week time period after the loan’s disbursement
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan funds can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I request loan forgiveness and when
Once all of the loan’s proceeds have been used the borrower is eligible for forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the last day of the covered period, then PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.