The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being adopted to make the application process for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Sallie Mae Loan Forgiveness Program – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This is when the loan payment is made within an 8 to 24 week period.
- The same goes for the pay and benefits for employees.
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of proceeds go to expenses for payroll
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can request forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 months after the last day of the period covered the PPP loan payments are no longer deferred and the borrower will be required to make payment to their PPP lender.