The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus pandemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness by 24 days after 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 additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Georgia Student Finance Commission Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be suitable to forgive loans. This applies if the loan disbursement occurs within an 8 to 24 week period.
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week covered period following loan payment:
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds can be used to pay payroll costs or other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
- How do I request loan forgiveness and when to apply
When all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loans are not deferred any longer, and borrowers must make payment to their PPP lender.