The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, particularly for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans within 24 hours of 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 issued additional updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Student Loan Forgiveness For Police Officers – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This happens if the loan disbursement occurs within an 8– to 24 week period.
- This is also true for compensation and employees.
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The proceeds of the loan could be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If they do not file for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loans are no longer deferred, and borrowers will begin making loan payments to their PPP lender.