The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the process of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness within 24 days of the date of the 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 released more updated forms.”
Forgiveness terms in the first draw of PPP loans
Trump Veteran Student Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24-week period after the loan’s disbursement
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the funds go to expenses for payroll
- How to apply for loan forgiveness and the time to apply
After all loan proceeds have been used the borrower is eligible for forgiveness. The borrower can apply for forgiveness at any time up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.