The U.S. Small Business Administration released a one-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 days of the date of 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 released new forms.”
First Draw PPP Loan forgiveness terms
When Will My Student Loans Be Forgiven – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week period after the disbursement of loan:
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan funds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of proceeds go to expenses for payroll
- How do I apply for loan forgiveness , and when to apply
When all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the period covered, then PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.
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