The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within the first 24 hours of the bill being signed into law to simplify the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP within 24 days of 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 published new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Navient And Sallie Mae Student Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24-week covered period following the loan’s disbursement
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exactly the same manner.
- The loan proceeds could be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of profits go towards the cost of payroll
- How and when to apply for loan forgiveness?
When all of the loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the last day of the time period that was covered, then PPP loans are not deferred any longer, and borrowers will begin making payment to their PPP lender.