The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness by 24 days after 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 the updated forms.”
First Draw PPP Terms of loan forgiveness
Public Service Loan Forgiveness Form Navient – First Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24-week period after the disbursement of loan:
- Pay and worker levels are maintained
- The loan proceeds are spent on payroll and other expenses that are eligible and
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
- How to apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred and borrowers will begin making monthly payments to their PPP lender.