The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness 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 the updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Georgia – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week period after loan disbursement:
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of proceeds go to the cost of payroll
- How do I apply for loan forgiveness , and when to apply
A borrower may apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the last day of the time period that was covered the PPP loan payments can no longer deferred, and borrowers must make loan payments to their PPP lender.