The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that comply with the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, particularly for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours of 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 released the updated forms.”
First Draw PPP Terms of loan forgiveness
Yellowstone Account Services Loan Forgiveness – For eligible borrowers, First Draw PPP loans are eligible to be forgiven. This is when the loan is disbursed within an 8 to 24 week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan funds are used on payroll expenses and other eligible expenses; and
- Minimum 60% of proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness
When all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any time until the loan’s maturity date. If they do not file for forgiveness within 10 months after the date of expiration of the time period that was covered the PPP loan payments can no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.