The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The law requires that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions to encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness by 24 days after 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.”
First Draw PPP Loan forgiveness terms
Student Loan Debt Forgiveness Public Service – For those who qualify First Draw PPP loans can be qualified to be forgiven. This happens when the loan is disbursed within an 8– to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to expenses for payroll
- How do I request loan forgiveness and when to apply
A borrower may apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 years of the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making payment to their PPP lender.