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 that meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. The law requires that the SBA provide simplified forms within 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans within 24 hours of the date of 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 issued new forms.”
First Draw PPP Terms of loan forgiveness
Fbi Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are suitable to forgive loans. This is when the loan payment is made within an 8– to 24-week period.
- Employee and compensation levels are ensured
- The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- At least 60% of the proceeds are used for the cost of payroll
- How to apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered the PPP loan payments can no longer deferred and borrowers must make monthly payments to their PPP lender.