The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 hours of the date of enactment 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 issued more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Fels Loan Forgiveness Application – For borrowers who are eligible, First Draw PPP loans can be qualified to forgive loans. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- The same goes for the pay and benefits for employees.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week duration following loan payment:
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
After all loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can request forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the last day of the time period that was covered the PPP loans are no longer deferred and borrowers must make payment to their PPP lender.
Download Fels Loan Forgiveness Application
Gallery of Fels Loan Forgiveness Application
