The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being signed into law to simplify the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans within 24 hours of the date of enactment 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 issued updated forms.”
First Draw PPP Terms of loan forgiveness
Alumni Solutions Loan Forgiveness – For those who qualify First Draw PPP loans can be eligible to forgive loans. This happens when the loan is disbursed within an 8 to 24-week period.
- This is also true for compensation and employees.
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness
A borrower can apply for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the period covered, then PPP loans are no longer deferred and borrowers will begin making monthly payments to their PPP lender.