The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being adopted to make the application process for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 hours of the date of the 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 issued the updated forms.”
First Draw PPP Terms of loan forgiveness
Where Do I Submit My Public Student Loan Forgiveness Form – For borrowers who are eligible First Draw PPP loans can be eligible to forgive loans. This applies when the loan is disbursed within an 8– to 24-week timeframe.
- The levels of compensation and employee pay are ensured
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness if the loan is paid within an 8to 24 week period.
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the end of the period covered and the loan is not renewed, PPP loans are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.