The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the bill being adopted to make the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms for the initial draw of PPP loans
Student Loan Forgiveness Canada 2022 – For those who qualify First Draw PPP loans are qualified for loan forgiveness. This is when the loan is disbursed within an 8– to 24-week timeframe.
- Employee and compensation levels are ensured
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is repaid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds can be used to pay payroll costs or other eligible expenses.
- At least 60% of funds go to expenses for payroll
- How to apply for loan forgiveness and when
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.