The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to mitigate the economic effects of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined 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, particularly for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness 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 issued additional updated forms.”
First Draw PPP Loan forgiveness terms
Federal Student Loan Forgiveness Program Calls – For those who qualify, First Draw PPP loans are eligible to forgive loans. This is when the loan is disbursed within an 8 to 24-week period.
- This is also true for compensation and employees.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of funds go to the cost of payroll
- How to apply for loan forgiveness , and the time to apply
A borrower can apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are eligible to receive payment from their PPP lender.