The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release 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 at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Terms of loan forgiveness
Do Stafford Loans Qualify For Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week period after the loan’s disbursement
- The same goes for the pay and benefits for employees.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan proceeds could be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
- How do I 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. Borrowers may apply for forgiveness at any point up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.