The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed 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 days of the legislation being signed into law to simplify the process of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Terms of loan forgiveness
Are Federal Student Loans Forgiven After 25 Years – First Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week period after the loan’s disbursement
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible customers are eligible for loan repayment if the loan is paid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the profits go towards payroll costs
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are eligible to receive payment from their PPP lender.