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. The form also contains newly updated forms to comply with the most recent stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, especially for minority-owned companies that were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness within 24 hours of the date of enactment of 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 new forms.”
First Draw PPP Conditions for loan forgiveness
Financial Preparation Services Student Loan Forgiveness – For those who qualify, First Draw PPP loans are qualified to be forgiven. This applies when the loan payment is made within an 8 to 24-week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week time period after loan disbursement:
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The proceeds of the loan could be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness?
When all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers can request forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.
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