The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. The law required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions to encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Sallie Mae Navient Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be qualified to be forgiven. This is when the loan is disbursed within an 8 to 24 week period.
- The levels of compensation and employee pay are maintained
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The proceeds of the loan could 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 and when to apply for loan forgiveness
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. 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 years of the last day of the covered period, then PPP loan payments can not deferred any longer, and the borrower will be required to make payment to their PPP lender.