The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The law required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. It also included conditions to encourage community banks to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans by 24 days after the date of enactment 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 additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Devry Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This happens when the loan is disbursed within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to pay expenses for payroll or other expenses that are eligible.
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified customers are eligible for loan repayment when the loan is paid within an 8– to 24 week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- At least 60% of proceeds are spent on payroll costs
- When and how do I apply for loan forgiveness
After all loan proceeds have been used, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the time period that was covered the PPP loan payments are no longer deferred, and borrowers must make payment to their PPP lender.