The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that would encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 days of the date of enactment 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 published updated forms.”
First Draw PPP Loan forgiveness terms
Will Sallie Mae Forgive Loans – For those who qualify First Draw PPP loans are suitable to be forgiven. This applies when the loan is disbursed within an 8 to 24-week period.
- Employee and compensation levels are ensured
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds could be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
After all loan’s proceeds have been used, a borrower can apply for forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.