The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
First Draw PPP Terms of loan forgiveness
Womply Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are eligible to forgive loans. This is when the loan is disbursed within an 8 to 24 week period.
- Pay and worker levels are ensured
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds are used on payroll and other eligible expenses; and
- A minimum of 60% of profits are used to pay for payroll expenses
- How and when to apply for loan forgiveness
A borrower may apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the time period that was covered, then PPP loan payments are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.