The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 aid package Congress passed last month revived 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. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that were unable to obtain loans last year.
“The Small Business Administration met the requirements to release 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 released updated forms.”
Terms for forgiveness for the first draw of PPP loans
Qualifying Public Service Jobs For Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This happens when the loan payment is made within an 8 to 24-week period.
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan proceeds could be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of profits are used for the cost of payroll
- When and how do I apply for loan forgiveness
A borrower may apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are able to receive payment from their PPP lender.