The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 days 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 released the updated forms.”
First Draw PPP Conditions for loan forgiveness
Is Biden Forgiving Student Loans – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week period after the disbursement of loan:
- The same goes for the compensation and employees.
- The loan funds are used on payroll and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are eligible for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan funds could be used to pay payroll costs or other expenses that are eligible.
- At least 60% of funds go to the cost of payroll
- How to apply for loan forgiveness , and the time to apply
When all of the loan funds have been utilized the borrower is eligible for forgiveness. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the last day of the period covered, then PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.