The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness within 24 hours of the date of the 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 released additional updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Executive Order – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8 to 24 week period that follows the loan’s disbursement
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8– to 24-week time frame.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- Minimum 60% of proceeds go to the cost of payroll
- How and when to apply for loan forgiveness
Once all of the loan funds have been utilized The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are able to receive the loan payment from their PPP lender.