The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans by 24 days after the date of the 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 published new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Donald Trump Student Loan Forgiveness Program – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24-week period after loan disbursement:
- The same goes for the employee compensation and the.
- The loan proceeds can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week covered period following the loan’s disbursement
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll as well as other eligible expenses and
- At least 60% of proceeds are used to pay for payroll expenses
- How do I request loan forgiveness and when
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are able to receive payment from their PPP lender.