The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness Iowa – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8to 24-week period.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- At least 60% of the proceeds are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
Once all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. Borrowers can request forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the last day of the time period that was covered, then PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.