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 the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans by 24 days after the date of the 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 published new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Bidens Student Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24-week period after the loan’s disbursement
- This is also true for compensation and employees.
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- 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 for the cost of payroll
- How to request loan forgiveness and when
When all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months after the end of the period covered, then PPP loan payments are not deferred any longer, and the borrower will be required to make payment to their PPP lender.