The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the current stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Conditions for loan forgiveness
70 Disabled Veteran Student Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness within the 8-to 24-week covered period following the loan’s disbursement
- The same goes for the compensation and employees.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan funds could be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds go to expenses for payroll
- How and when to apply for loan forgiveness
A borrower may apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can request forgiveness at any time up to the loan’s maturity date. If they do not file for forgiveness within 10 months after the date of expiration of the covered period and the loan is not renewed, PPP loans are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.