The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Federal Government Employees – For borrowers who are eligible First Draw PPP loans can be eligible for loan forgiveness. This happens when the loan payment is made within an 8– to 24-week period.
- The same goes for the employee compensation and the.
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24-week time frame.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds could be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness?
When all of the loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any time until the loan’s maturity date. If they do not file for forgiveness within 10 years of the last day of the covered period and the loan is not renewed, PPP loan payments are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.