The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses who 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 the 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 new forms.”
Forgiveness terms for the first draw of PPP loans
Nursing Loan Forgiveness Pa – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness during the 8- to 24 week period that follows the loan’s disbursement
- The same goes for the compensation and employees.
- The loan proceeds can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
- How and when to apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds for which the borrower wants forgiveness have been utilized. 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 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.