The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus legislation.
The COVID-19 aid package Congress passed 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 outbreak. It also included a requirement that the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness by 24 days after the date of the enactment of 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 released new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness For Everest – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8 to 24-week covered period following loan disbursement:
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- At least 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– 24 week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds can be used to cover payroll costs or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
- How and when to apply for loan forgiveness?
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 month of the end date of the loan will be able to receive the loan payment from their PPP lender.