The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans within 24 hours of the date of 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 released more updated forms.”
Forgiveness terms in the initial draw of PPP loans
PPP Loan Forgiveness Application Types – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if within the 8 to 24-week covered period following the loan’s disbursement
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- How to request loan forgiveness and when
The borrower is eligible for forgiveness once all loan proceeds to 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 months of the expiration date of the loan are eligible to receive loan payments from their PPP lender.