The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The law required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms.”
Terms for forgiveness for the first draw of PPP loans
$50000 Student Loan Forgiveness – For eligible borrowers First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan proceeds can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following loan disbursement:
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness , and the time to apply
Once all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the covered period the PPP loan payments can no longer deferred and the borrower will be required to make monthly payments to their PPP lender.