The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The law requires that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. It also included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP by 24 days after 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 published new forms that were updated.”
Forgiveness terms in the first draw of PPP loans
Do Nurses Qualify For Student Loan Forgiveness – For those who qualify First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
- How to apply for loan forgiveness , and when to apply
After all loan funds have been utilized the borrower is eligible to be forgiven. The borrower can request forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.