The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the bill being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness within 24 days 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 new forms.”
First Draw PPP Terms of loan forgiveness
Public Service Loan Forgiveness Form 2020 – For those who qualify, First Draw PPP loans can be suitable for loan forgiveness. This happens when the loan is disbursed within an 8 to 24 week period.
- This is also true for compensation and employees.
- The loan funds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week covered period following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- At least 60% of funds go to payroll costs
- How do I apply for loan forgiveness , and the time to apply
When all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. Borrowers can request forgiveness at any time until the date of maturity. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.