The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 days after the legislation was adopted to make the application process for forgiveness. It also included conditions meant to encourage more loans from community banks, especially for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 days of the date of the 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 issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Private Loans – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24-week period after the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds could be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
When all of the loan funds have been utilized The borrower may apply to be forgiven. The borrower can request forgiveness at any time prior to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loan payments can not deferred any longer, and borrowers must make payment to their PPP lender.