The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding to small businesses that 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 hours after the legislation was signed into law to simplify the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
Forgiveness terms for the initial draw of PPP loans
Will Trump Forgive Student Loans – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week period after loan disbursement:
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds from the loan may be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- A minimum of 60% of the profits are used for the cost of payroll
- How to apply for loan forgiveness and when to apply
When all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can request forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.