The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being adopted to make the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one page form for loan forgiveness under the PPP within 24 hours 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 new forms.”
Forgiveness terms for the initial draw of PPP loans
Cnn Student Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified for loan forgiveness. This is when the loan payment is made within an 8– to 24 week period.
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan funds can be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to the cost of payroll
- How and when to apply for loan forgiveness
A borrower may apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the time period that was covered, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.