The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned companies that struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP 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 updated forms.”
First Draw PPP Loan forgiveness terms
Globe University Student Loan Forgiveness – For those who qualify First Draw PPP loans are eligible for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week period.
- It’s the same for compensation and employees.
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- At least 60% of funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness if the loan is paid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan proceeds are used on payroll as well as other eligible expenses and
- A minimum of 60% of the proceeds go to payroll costs
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 years of the date of expiration of the covered period, then PPP loan payments can no longer deferred and borrowers will begin making payment to their PPP lender.