The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the application process for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans 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 published the updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness Covid – For eligible borrowers, First Draw PPP loans can be suitable to be forgiven. This is when the loan is disbursed within an 8 to 24-week period.
- The same goes for the compensation and employees.
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are eligible for loan repayment if the loan is paid within an 8– 24 week period.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of funds go to payroll costs
- How do I apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loan payments are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.