The U.S. Small Business Administration released a one-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, especially for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the one page form for loan forgiveness under the PPP within 24 hours of the date of enactment 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 published updated forms.”
Forgiveness terms for the first draw of PPP loans
Sallie Mae Loan Forgiveness Form – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24-week period after the loan’s disbursement
- The levels of compensation and employee pay are maintained
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made 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 employee and compensation levels be maintained in the exactly the same manner.
- The loan proceeds are used on payroll and other eligible expenses; and
- A minimum of 60% of the profits are used for the cost of payroll
- How do I request loan forgiveness and the time to apply
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date of maturity. Borrowers who don’t request forgiveness within 10 month of the end date of the loan will be able to receive payment from their PPP lender.