The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The law required that the SBA provide simplified forms within 24 hours of the signing into law. This was to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness by 24 days after the date of enactment of 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 published additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Employemnt Certification Form – For eligible borrowers, First Draw PPP loans are eligible to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- Employee and compensation levels are ensured
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan proceeds can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of funds go to payroll costs
- How do I request loan forgiveness and the time to apply
When all of the loan proceeds have been used The borrower may apply to be granted forgiveness. The borrower can apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 months after the date of expiration of the covered period, then PPP loans are no longer deferred, and borrowers must make payment to their PPP lender.