The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. It also included conditions that would 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 single-page form for PPP loan forgiveness within 24 hours of the date of the enactment of 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 issued additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Consolidation – For eligible borrowers First Draw PPP loans are suitable to forgive loans. This is if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of funds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- A minimum of 60% of the funds go to payroll costs
- How do I request loan forgiveness and when
A borrower may apply for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the date of maturity. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are eligible to receive loan payments from their PPP lender.