The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The law required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness by 24 days after the date of enactment of 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.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness Likelihood – For eligible borrowers, First Draw PPP loans are suitable to forgive loans. This happens when the loan is disbursed within an 8– to 24 week period.
- This is also true for pay and benefits for employees.
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of the profits are used for the cost of payroll
- How do I request loan forgiveness and the time to apply
A borrower may apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers may apply for forgiveness at any time until the date of maturity. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive payment from their PPP lender.
Download Student Loan Forgiveness Likelihood
Gallery of Student Loan Forgiveness Likelihood
