The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being adopted to make the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness 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 issued additional updated forms.”
First Draw PPP Loan forgiveness terms
Nelnet Loan Forgiveness Lawsuit – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24-week period after the loan’s disbursement
- It’s the same for employee compensation and the.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of funds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The proceeds of the loan could be used to pay for payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to expenses for payroll
- How to apply for loan forgiveness and the time to apply
After all loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the end of the period covered the PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.