The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with 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 Loan forgiveness terms
Student Loan Forgiveness Non Profit Application – For borrowers who are eligible First Draw PPP loans can be suitable to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- It’s the same for compensation and employees.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is paid within an 8– 24-week period.
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds can be used to pay payroll costs or other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any time until the date at which the loan matures. If they do not file for forgiveness within 10 months of the end of the time period that was covered the PPP loans are not deferred any longer, and the borrower will be required to make payment to their PPP lender.