The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans by 24 days after the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Conditions for loan forgiveness
Everest Student Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness during the 8- to 24 week period that follows loan disbursement:
- This is also true for compensation and employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exact same way.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- Minimum 60% of funds go to payroll costs
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.