The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 hours of the bill being adopted to make the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
Forgiveness terms in the first draw of PPP loans
How Do You Get Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are qualified for loan forgiveness. This happens when the loan payment is made within an 8 to 24-week period.
- The same goes for the employee compensation and the.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan proceeds are used on payroll and other expenses that are eligible and
- At least 60% of profits go towards payroll costs
- How do I apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months of the last day of the covered period the PPP loans are no longer deferred, and borrowers must make monthly payments to their PPP lender.