The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The law required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue 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 who is a partner of 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 Loan forgiveness terms
Student Loan Forgiveness Programs For Nurse Practitioners – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24-week period after the loan’s disbursement
- The levels of compensation and employee pay are ensured
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8to 24 week period.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
- How to apply for loan forgiveness , and when
After all loan proceeds have been used the borrower is eligible to be granted forgiveness. 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 end of the time period that was covered and the loan is not renewed, PPP loans are no longer deferred, and borrowers must make monthly payments to their PPP lender.