The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans by 24 days after the date of the 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 published new forms.”
Forgiveness terms in the initial draw of PPP loans
Former Empire State College Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This applies if the loan disbursement occurs within an 8 to 24 week period.
- It’s the same for employee compensation and the.
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week time period after loan payment:
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to the cost of payroll
- How to apply for loan forgiveness , and when
A borrower may apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the last day of the period covered the PPP loans are no longer deferred, and borrowers must make loan payments to their PPP lender.