The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was 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 struggled to get loans last year.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP by 24 days after 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 issued new forms.”
First Draw PPP Loan forgiveness terms
How To File For Student Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8 to 24 week period that follows the loan’s disbursement
- The levels of compensation and employee pay are maintained
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- Minimum 60% of proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been used. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.