The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
National Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This applies if the loan disbursement occurs within an 8– to 24-week period.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– to 24 week time frame.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds could be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds go to expenses for payroll
- How to apply for loan forgiveness and when
A borrower may apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If the borrower does not apply for forgiveness within 10 years of the last day of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.