The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised 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 of funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness within 24 hours of the date of enactment of 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 issued the updated forms.”
First Draw PPP Loan forgiveness terms
How Would Forgiving Student Loans Work – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week covered period following the disbursement of loan:
- Pay and worker levels are kept at a constant level.
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible customers are eligible for loan repayment if the loan is paid within an 8– to 24 week period.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll as well as other eligible expenses and
- At least 60% of proceeds go to expenses for payroll
- How to apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can request forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the time period that was covered, then PPP loan payments can not deferred any longer, and borrowers will begin making payment to their PPP lender.