The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress passed 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 simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses that had trouble getting loans last year.
“The Small Business Administration met the requirement of releasing the one 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 with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loan Debt Forgiveness Application – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness within the 8 to 24 week period that follows loan disbursement:
- It’s the same for employee compensation and the.
- The proceeds from the loan may be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of profits go towards payroll costs
- How to apply for loan forgiveness , and the time to apply
After all loan funds have been utilized The borrower may apply to be forgiven. The borrower can request forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.