The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one page form for loan forgiveness under the PPP by 24 days after the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with 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
Non Profit Student Loan Forgiveness Form – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8 to 24-week period after the disbursement of loan:
- Pay and worker levels are maintained
- The proceeds from the loan may be used to pay expenses for payroll or other expenses that are eligible.
- Minimum 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
When all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.