The U.S. Small Business Administration released a one-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and included $284 billion of financing for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement of releasing the single-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 who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Terms of loan forgiveness
Loan Forgiveness For Everest College Students – For those who qualify First Draw PPP loans can be suitable for loan forgiveness. This happens if the loan disbursement occurs within an 8– to 24-week period.
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to cover payroll costs or other eligible expenses.
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 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 proceeds are used on payroll costs and other eligible expenses; and
- Minimum 60% of funds go to expenses for payroll
- How do I apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been utilized. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 years of the last day of the period covered, then PPP loan payments can no longer deferred, and borrowers must make payment to their PPP lender.