The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for forgiveness of 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 plan that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the bill being approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP within 24 hours of the date of 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 released new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Dave Ramsey Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are qualified to forgive loans. This happens if the loan disbursement occurs within an 8 to 24-week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
When all of the loan proceeds have been used the borrower is eligible to be forgiven. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are eligible to receive payment from their PPP lender.