The U.S. Small Business Administration released a one-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Programs By State – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay expenses for payroll or other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24-week time period after loan payment:
- Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness once 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 the borrower does not apply for forgiveness within 10 years of the date of expiration of the period covered the PPP loan payments are no longer deferred, and borrowers will begin making monthly payments to their PPP lender.