The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The law required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness by 24 days after the date of 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 the updated forms.”
Forgiveness terms for the initial draw of PPP loans
Coastal Carolina Student Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week covered period following the disbursement of loan:
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds go to payroll costs
- When and how do I apply for loan forgiveness?
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan are able to receive the loan payment from their PPP lender.