The Small Business Administration (SBA) and the Treasury Department announced that they’ve reached an agreement to make PPP loan forgiveness a simpler and smoother process.
The simplified 1-page PPP loan forgiveness application form is aimed at loans of $50,000 and less, which means that it’s targeted primarily at solopreneurs, home-based businesses, and very small businesses with one to several employees.
PPP or Paycheck Protection Program loans were created in March 2020 as part of the vital Coronavirus Relief Aid. Initially, Paycheck Protection Program loans were meant for payroll and other essential expenses aimed at preventing small businesses from shutting down while unable to pay employees due to lockdown. Receiving PPP loan forgiveness involved gathering quite a bit of paperwork to prove that the loan was used towards employee wages and other vital expenses like business rent, utilities, or business mortgage payments.
Since March, about 70% of all small business owners applied for PPP loans, and about 67% of those who received aid, says the U.S. Census Bureau. Among businesses requesting PPP loans, the healthcare, restaurant, and hospitality industries (sectors hardest hit during the pandemic) were among the most frequent applicants.
For small and very small businesses nationwide, one of the most challenging aspects of receiving PPP loan forgiveness was doing the paperwork to prove the loan went to fair use. This was especially tough if there were only 1-2 employees, or if the business owner was also its sole employee as in the case of countless small businesses across the country.
The current guidance from the Treasury Department and the SBA eliminates a lot of those hassles and paperwork for anyone with a loan of $50,000 or less.
If you have a PPP loan of $50,000 or less, all you have to do is fill out a 1-page application form and have your lender process it.
You’ll also notice that the formidable PPP Loan Forgiveness Calculation Form is no longer necessary for borrowers of $50k or less. Business owners only have to attach supporting documents demonstrating how the expenses were met through the aid of the loan.
The current guidance is meant to simplify PPP loan forgiveness for about 70% of loan applicants and what’s important — for countless very small business owners who have every penny on the line. However, the SBA is also working on a new stimulus to ease loan forgiveness for borrowers of up to $150,000, which means a greater sector of small business will soon benefit.
Learn more about Coronavirus Relief Aid for Small Business.
