The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses that needed loans. The funds were used to reduce the economic burden of 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, specifically for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness by 24 days after 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 published new forms that were updated.”
Terms for forgiveness for the initial draw of PPP loans
Student Loan Forgiveness For Speech Therapists – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week covered period following the disbursement of loan:
- The levels of compensation and employee pay are maintained
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is repaid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds are used on payroll and other eligible expenses; and
- At least 60% of the profits are used to pay for payroll expenses
- How do I apply for loan forgiveness and when to apply
The borrower is eligible for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers must make payment to their PPP lender.