The U.S. Small Business Administration has released a single-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 meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the procedure of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, especially for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans by 24 days after the date of 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 issued the updated forms.”
First Draw PPP Terms of loan forgiveness
Borrowers Defense Loan Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8- to 24-week period after the disbursement of loan:
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week duration following loan payment:
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.