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 that are in line with the latest stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, especially for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
First Draw PPP Loan forgiveness terms
Navient Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24 week period that follows the disbursement of loan:
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll expenses and other eligible expenses; and
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment if the loan is paid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the identical manner.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds go to payroll costs
- How do I apply for loan forgiveness , and when to apply
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If they do not file for forgiveness within 10 years of the date of expiration of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and the borrower will be required to make loan payments to their PPP lender.