The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans 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 updated forms.”
Forgiveness terms for the initial draw of PPP loans
Student Loan Forgiveness Program Reviews – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness within the 8-to 24 week period that follows the disbursement of loan:
- Employee and compensation levels are kept at a constant level.
- The proceeds from the loan may be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is paid within an 8to 24 week period.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of profits are spent on payroll costs
- How and when to apply for loan forgiveness?
A borrower can apply for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are able to receive payment from their PPP lender.
Download Student Loan Forgiveness Program Reviews
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