The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness For Medical Technologists – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week period after the disbursement of loan:
- This is also true for pay and benefits for employees.
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exactly the same manner.
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- At least 60% of the profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
When all of the loan proceeds have been used, a borrower can apply for forgiveness. Borrowers may apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 months after the last day of the time period that was covered and the loan is not renewed, PPP loans are no longer deferred, and borrowers will begin making monthly payments to their PPP lender.