The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP within 24 hours of the date of the 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 published updated forms.”
Forgiveness terms in the initial draw of PPP loans
Text Student Loan Flagged For Forgiveness – For eligible borrowers First Draw PPP loans can be qualified for loan forgiveness. This is when the loan payment is made within an 8 to 24-week period.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is paid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan funds can be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.