The U.S. Small Business Administration has released a single-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans within 24 hours of the date of 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 the updated forms.”
First Draw PPP Loan forgiveness terms
Joe Biden Student Loan Forgiveness Plan – For borrowers who are eligible, First Draw PPP loans are qualified to forgive loans. This applies when the loan is disbursed within an 8– to 24-week timeframe.
- It’s the same for employee compensation and the.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week duration following loan disbursement:
- 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 and other expenses that are eligible and
- At least 60% of the profits are spent on payroll costs
- How and when to apply for loan forgiveness?
Once all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the last day of the period covered and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers must make monthly payments to their PPP lender.