The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The legislation required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. It also included conditions to encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 days of the date of enactment of 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 published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
For Profit Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be suitable to be forgiven. This is when the loan payment is made within an 8 to 24 week period.
- Pay and worker levels are maintained
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week time period after loan disbursement:
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of funds go to payroll costs
- How to request loan forgiveness and the time to apply
A borrower can apply for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are able to receive loan payments from their PPP lender.