The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process to forgive Paycheck Protection Program loans, along with newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 hours of the bill being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, particularly for minority-owned companies that were unable to obtain loans last year.
“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 who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Terms of loan forgiveness
Public Service Student Loan Forgiveness Employment Certification Form – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24-week period after the loan’s disbursement
- The same goes for the pay and benefits for employees.
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8to 24-week time frame.
- Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
- How to request loan forgiveness and when
After all loan funds have been utilized, a borrower can apply to be forgiven. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive the loan payment from their PPP lender.