The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the application process for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, especially 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 by 24 days after the date of 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 issued new forms.”
Terms for forgiveness for the initial draw of PPP loans
How To Be Eligible For Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This is when the loan payment is made within an 8– to 24-week period.
- This is also true for employee compensation and the.
- The loan proceeds can be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week covered period following loan payment:
- Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the covered period and the loan is not renewed, PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.