The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 days after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, especially for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one-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 released new forms that were updated.”
First Draw PPP Loan forgiveness terms
Credit Forgiveness Car Loans – For those who qualify First Draw PPP loans are suitable to forgive loans. This is when the loan is disbursed within an 8– to 24-week timeframe.
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of proceeds go to payroll costs
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any point up to the date of maturity. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.