The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours after the legislation was adopted to make the application process for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness within 24 hours 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 new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Upmc Loan Forgiveness – For eligible borrowers First Draw PPP loans can be qualified to forgive loans. This applies when the loan payment is made within an 8 to 24-week timeframe.
- It’s the same for pay and benefits for employees.
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- A minimum of 60% of proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness?
Once all of the loan proceeds have been used, a borrower can apply for forgiveness. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loans are no longer deferred, and borrowers will begin making payment to their PPP lender.