The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. It also included conditions to encourage community banks to lend more particularly to 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 the forgiveness of PPP loans by 24 days after the date of the enactment of 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 released new forms.”
First Draw PPP Conditions for loan forgiveness
Paul Mitchell Student Loan Forgiveness – For those who qualify, First Draw PPP loans can be qualified to be forgiven. This happens when the loan payment is made within an 8 to 24-week period.
- It’s the same for pay and benefits for employees.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week duration following loan disbursement:
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to the cost of payroll
- How to apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the last day of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.