The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 days of the date of 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 additional updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness New Law 2022 – For those who qualify First Draw PPP loans are suitable to be forgiven. This is when the loan is disbursed within an 8 to 24-week period.
- Pay and worker levels are maintained
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The proceeds of the loan could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds go to payroll costs
- How to apply for loan forgiveness , and when to apply
A borrower may apply for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are able to receive the loan payment from their PPP lender.