The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The law required that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. It also included conditions that encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days 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 published updated forms.”
Terms for forgiveness for the initial draw of PPP loans
When Is The Ppp Loan Forgiveness Application Due – First Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24-week period after the loan’s disbursement
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
- How to request loan forgiveness and when
A borrower may apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the last day of the covered period, then PPP loan payments can no longer deferred and borrowers must make payment to their PPP lender.