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, together with updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment 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 released additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Trump Student Loan Forgiveness Program – For borrowers who are eligible First Draw PPP loans are suitable for loan forgiveness. This happens when the loan payment is made within an 8– to 24-week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week duration following loan payment:
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the funds go to payroll costs
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the period covered, then PPP loans are not deferred any longer, and borrowers must make payment to their PPP lender.