The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of 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 forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the procedure of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms for the initial draw of PPP loans
Aes Student Loan Forgiveness Teachers – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following the disbursement of loan:
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The proceeds of the loan could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds go to payroll costs
- How and when to apply for loan forgiveness
A borrower may apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.
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