The U.S. Small Business Administration released a one-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage community banks to lend more specifically to minority-owned companies that had difficulty getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
Terms for forgiveness for the initial draw of PPP loans
How To Qualify For A Student Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24-week covered period following the disbursement of loan:
- It’s the same for compensation and employees.
- The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week time period after loan payment:
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
- How do I request loan forgiveness and when to apply
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the end of the period covered the PPP loans are no longer deferred and the borrower will be required to make payment to their PPP lender.
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