The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the current stimulus law.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP 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 issued more updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Health Assistance Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24 week period that follows the loan’s disbursement
- Pay and worker levels are ensured
- The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following the loan’s disbursement
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds can be used to pay for payroll costs or other eligible expenses.
- At least 60% of funds go to expenses for payroll
- How do I apply for loan forgiveness , and the time to apply
The borrower is eligible for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the last day of the period covered and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.