The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the legislation being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans within 24 hours of the date of the 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 issued new forms that were updated.”
Forgiveness terms in the first draw of PPP loans
Grand Canyon University Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week period after the loan’s disbursement
- This is also true for employee compensation and the.
- 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 Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
- How do I apply for loan forgiveness , and when
After all loan funds have been utilized the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are able to receive the loan payment from their PPP lender.