The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus law.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. It also included conditions to encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty 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 days of the date of enactment 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 published the updated forms.”
Forgiveness terms in the initial draw of PPP loans
Which Student Loans Are Forgiven – For those who qualify First Draw PPP loans can be suitable for loan forgiveness. This applies when the loan is disbursed within an 8 to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8to 24-week time frame.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds go to the cost of payroll
- How and when to apply for loan forgiveness
After all loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can request forgiveness at any time prior to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.
Download Which Student Loans Are Forgiven
Gallery of Which Student Loans Are Forgiven
