The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Paypal Ppp Loan Forgiveness – For those who qualify, First Draw PPP loans can be qualified for loan forgiveness. This is when the loan payment is made within an 8– to 24-week period.
- Pay and worker levels are maintained
- The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
- At least 60% of funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
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 payment:
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are used for the cost of payroll
- How to request loan forgiveness and when
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 months after the last day of the covered period the PPP loan payments are no longer deferred and borrowers must make monthly payments to their PPP lender.