The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being adopted to make the process of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness by 24 days after the date of enactment 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.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Calls – First Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8 to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness , and the time to apply
A borrower can apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the last day of the covered period the PPP loan payments can no longer deferred and borrowers will begin making payment to their PPP lender.