The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published more updated forms.”
Forgiveness terms for the first draw of PPP loans
2022 Student Loan Forgiveness Program Navient – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24 week period that follows loan disbursement:
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I request loan forgiveness and when
When all of the loan funds have been utilized, a borrower can apply for forgiveness. Borrowers may apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.