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, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the application process for forgiveness. It also included conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that were unable to obtain 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 days of 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 released more updated forms.”
First Draw PPP Terms of loan forgiveness
College Loan Forgiveness Programs – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This applies when the loan payment is made within an 8– to 24 week period.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is paid within an 8– 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any point up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loan payments can no longer deferred and borrowers will begin making monthly payments to their PPP lender.
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