The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Form For Nonprofit Employees – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week period after the disbursement of loan:
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan proceeds are used on payroll as well as other eligible expenses and
- A minimum of 60% of the funds go to payroll costs
- How and when to apply for loan forgiveness
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.