The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. It also included conditions that encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans by 24 days after 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 released the updated forms.”
Forgiveness terms in the first draw of PPP loans
South Dakota Student Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week period after the disbursement of loan:
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the identical manner.
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to payroll costs
- How do I request loan forgiveness and when to apply
When all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are eligible to receive the loan payment from their PPP lender.