The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP by 24 days after the date of enactment 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.”
Forgiveness terms for the first draw of PPP loans
Bernie Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans can be suitable to forgive loans. This is if the loan disbursement occurs within an 8– to 24 week period.
- This is also true for compensation and employees.
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan proceeds could be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits are used for the cost of payroll
- How to apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness once all loan proceeds for which the borrower wants forgiveness have been used. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.
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