The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the bill being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness within 24 days of the date of enactment 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 more updated forms.”
First Draw PPP Terms of loan forgiveness
Private Student Loan Forgiveness Programs – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness within the 8 to 24-week period after loan disbursement:
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the identical manner.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- Minimum 60% of proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.