The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the initial draw of PPP loans
What Qualifies You For Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be eligible for loan forgiveness. This happens when the loan payment is made within an 8 to 24 week period.
- The levels of compensation and employee pay are ensured
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment if the loan is paid within an 8to 24-week period.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay payroll costs or other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
- How to apply for loan forgiveness and the time to apply
A borrower can apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are able to receive the loan payment from their PPP lender.