The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 hours of the date of enactment 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 published more updated forms.”
Forgiveness terms in the first draw of PPP loans
Obama Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week covered period following the disbursement of loan:
- The levels of compensation and employee pay are maintained
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness if the loan is paid within an 8– 24 week period.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness?
Once all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the end of the covered period the PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.
Download Obama Loan Forgiveness
Gallery of Obama Loan Forgiveness
