The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus outbreak. The legislation required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published the updated forms.”
Terms for forgiveness for the first draw of PPP loans
Biden To Forgive Student Loans – For eligible borrowers First Draw PPP loans can be suitable for loan forgiveness. This happens if the loan disbursement occurs within an 8– to 24-week period.
- It’s the same for pay and benefits for employees.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds can be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
- When and how do I apply for loan forgiveness
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered the PPP loan payments can no longer deferred, and the borrower will be required to make loan payments to their PPP lender.