The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The legislation required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. It also included conditions that encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirements to release the one page form for the forgiveness of PPP loans by 24 days after 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 published the updated forms.”
Forgiveness terms for the first draw of PPP loans
Jones International University Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week covered period following the loan’s disbursement
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to pay for payroll costs or other expenses that are eligible.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is paid within an 8to 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 proceeds can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards expenses for payroll
- How to apply for loan forgiveness , and when
When all of the loan proceeds have been used the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the last day of the covered period, then PPP loans are no longer deferred, and borrowers must make monthly payments to their PPP lender.
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