The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 days after the legislation was signed into law to simplify the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 hours of the date of enactment 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 issued more updated forms.”
First Draw PPP Loan forgiveness terms
Heald Student 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 same goes for the compensation and employees.
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness when the loan is repaid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
- How to apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the period covered the PPP loans are no longer deferred and the borrower will be required to make loan payments to their PPP lender.