The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the legislation being adopted to make the application process for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP by 24 days after 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 released the updated forms.”
Terms for forgiveness for the first draw of PPP loans
Will Student Loans Be Forgiven In 2022 – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week period after the loan’s disbursement
- It’s the same for employee compensation and the.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week time period after loan disbursement:
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll and other expenses that are eligible and
- At least 60% of proceeds are used for the cost of payroll
- How to request loan forgiveness and when to apply
The borrower is eligible for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.