The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, especially for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment 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 Conditions for loan forgiveness
Navient Teacher Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are suitable to forgive loans. This applies when the loan payment is made within an 8– to 24 week period.
- The same goes for the pay and benefits for employees.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week covered period following the loan’s disbursement
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the funds go to payroll costs
- When and how do I apply for loan forgiveness?
When all of the loan proceeds have been used the borrower is eligible for forgiveness. The borrower can request forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the covered period and the loan is not renewed, PPP loan payments can no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.