The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 hours of the legislation being signed into law to simplify the procedure of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, specifically 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 issued more updated forms.”
First Draw PPP Terms of loan forgiveness
First Responder Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan is disbursed within an 8– to 24 week period.
- The levels of compensation and employee pay are ensured
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds could be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive the loan payment from their PPP lender.