The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 days 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 published the updated forms.”
First Draw PPP Terms of loan forgiveness
How Do You Qualify For Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are qualified for loan forgiveness. This is if the loan disbursement occurs within an 8– to 24-week period.
- Pay and worker levels are maintained
- The proceeds from the loan may be used to pay expenses for payroll or other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds could be used to cover payroll costs or other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
- When and how do I apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 years of the last day of the period covered and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.