The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus pandemic. It included a requirement for 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 bank loans by community banks, particularly for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for loan forgiveness under the PPP by 24 days after the date of enactment 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 new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Loan Forgiveness For Disabled Veterans Form – First Draw PPP loans made 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 loan’s disbursement
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is repaid within an 8– to 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- At least 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
Once all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can request forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.