The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law required that the SBA provide simplified forms within 24 hours of the signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue 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 with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Conditions for loan forgiveness
Cosmetology Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be qualified to forgive loans. This applies when the loan is disbursed within an 8– to 24-week timeframe.
- Pay and worker levels are maintained
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week time period after loan payment:
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- At least 60% of proceeds are used for the cost of payroll
- How to apply for loan forgiveness and when to apply
When all of the loan proceeds have been used, a borrower can apply to be forgiven. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the time period that was covered, then PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.