The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness within 24 hours 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 published updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Sallie Mae 2022 Student Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8- to 24 week period that follows the disbursement of loan:
- This is also true for employee compensation and the.
- The proceeds from the loan may be used to cover payroll costs or other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll costs and other eligible expenses; and
- Minimum 60% of proceeds go to the cost of payroll
- How do I apply for loan forgiveness and when to apply
A borrower can apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the time period that was covered and the loan is not renewed, PPP loans are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.