The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses in need of loans. The money was intended to mitigate the economic effects 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 process of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 hours of the date of the enactment of 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 issued new forms.”
First Draw PPP Conditions for loan forgiveness
William B Ford Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are qualified to be forgiven. This applies when the loan payment is made within an 8– to 24-week timeframe.
- Pay and worker levels are ensured
- The proceeds of the loan can be used to pay for payroll costs or other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 years of the end of the time period that was covered and the loan is not renewed, PPP loans are no longer deferred, and borrowers will begin making loan payments to their PPP lender.