The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. The legislation required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. It also included conditions that encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 days 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 released additional updated forms.”
First Draw PPP Terms of loan forgiveness
Can My Sallie Mae Loans Be Forgiven – For eligible borrowers First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan is disbursed within an 8– to 24 week period.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds can be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness if the loan is paid within an 8to 24 week period.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness , and the time to apply
A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.
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