The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness within 24 days of the date of the enactment of 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 released more updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loan Forgiveness For Medical Professionals – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows the disbursement of loan:
- The same goes for the employee compensation and the.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exactly the same manner.
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- A minimum of 60% of the profits are spent on payroll costs
- What is the best time to apply for loan forgiveness?
Once all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.