The U.S. Small Business Administration has released a single-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 conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA provide simplified forms within 24 hours of the signing into law. This was to make it easier to apply for forgiveness. It also included conditions to encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the one page form for the forgiveness of PPP loans within 24 hours of 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 new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Tpd Loan Forgiveness For Veterans Form – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24 week period that follows the loan’s disbursement
- Employee and compensation levels are maintained
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan repayment if the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan funds can be used to cover expenses for payroll or other expenses that are eligible.
- Minimum 60% of funds go to payroll costs
- When and how do I apply for loan forgiveness
When all of the loan proceeds have been used the borrower is eligible to be forgiven. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If they do not file for forgiveness within 10 months of the end of the time period that was covered, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.