The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiven loans to help deal with the financial fallout of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the application process for forgiveness. It also included conditions meant to encourage more loans from community banks, particularly for minority-owned companies that struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness within 24 days 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 new forms that were updated.”
First Draw PPP Loan forgiveness terms
Lrap Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be qualified to be forgiven. This applies if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for pay and benefits for employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- Minimum 60% of funds go to the cost of payroll
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.