SBA Releases Simplified Application for PPP Loan Forgiveness
The U.S. Small Business Administration (SBA) has released a new simplified application for Paycheck Protection Program (PPP) loans with a value of $50,000. The new application makes it easier for businesses to apply for forgiveness. It has fewer fields and requires less information. If you obtained a PPP loan but haven’t yet applied for forgiveness, you should familiarize yourself with the SBA’s new application.
SBA Releases Simplified Application for PPP Forgiveness
What Are PPP Loans?
PPP loans are part of the federal government’s Coronavirus Aid, Relief and Economic Security (CARES) Act. They are designed to help businesses, as well as some freelancers and self-employed workers, stay financially afloat.
All businesses with 500 or fewer employees can apply for a PPP loan. PPP loans do carry interest, but their interest rate is less than that of most traditional loans. The interest rate for a PPP loan is just 1%, whereas a traditional loan may have a 10% or higher interest rate. Furthermore, both the principal and accrued interest can be forgiven, assuming the necessary conditions are met.
PPP Forgiveness Requirements
The SBA has conditions regarding the forgiveness of PPP loans. Depending on whether these conditions are met, some, none or all of a PPP loan may be forgiven. PPP loans can be fully forgiven, for instance, if all funds are used to cover payroll, rent and utilities.
As explained on the SBA’s website, forgiveness is based primarily on payroll. If you use a PPP loan to maintain your business’s employees — or if you use it to hire new employees — it can be forgiven. With that said, forgiveness is reduced if your business loses employees and its payroll shrinks.
What Is the New PPP Loan Forgiveness Application?
Available by clicking here, the SBA’s new PPP loan forgiveness application offers an easier and faster way to apply for forgiveness. One of the main differences between the new application and the old application is that the former doesn’t require calculation.
In the old application, you would have to enter specific calculations about your business’s expenses. The new application, on the other hand, only requires you to confirm that the funds were used to cover eligible expenses.
You’ll still have to submit documents when applying for forgiveness. Fortunately, the SBA’s new application requires fewer documents as well. If you used a PPP loan to cover payroll, you can submit bank statements showing the funds being transferred from your business to your employees.
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