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 forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being signed into law to simplify the application process for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans within 24 days of the date of enactment 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.”
Terms for forgiveness for the initial draw of PPP loans
Devry University Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24 week period that follows loan disbursement:
- The same goes for the compensation and employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is paid within an 8to 24 week period.
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The proceeds of the loan could be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits are used for the cost of payroll
- How to apply for loan forgiveness and when to apply
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the date of expiration of the covered period the PPP loans are no longer deferred, and borrowers must make payment to their PPP lender.