The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 days after the legislation was signed into law to simplify the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, especially for minority-owned companies that struggled to get loans in the past.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 days of the date of the 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 new forms.”
Forgiveness terms in the first draw of PPP loans
Is Sallie Mae Loan Forgiveness Real – For those who qualify, First Draw PPP loans can be qualified to be forgiven. This happens when the loan payment is made within an 8– to 24-week period.
- The same goes for the pay and benefits for employees.
- The proceeds from the loan may be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week time period after loan disbursement:
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- A minimum of 60% of the profits go towards the cost of payroll
- How do I request loan forgiveness and when to apply
A borrower may apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date of maturity. 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.