The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the most recent 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 forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The legislation required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to lend more specifically to minority-owned companies that had difficulty getting loans in the past.
“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 the 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 the updated forms.”
First Draw PPP Terms of loan forgiveness
Can Bernie Forgive Student Loans – For those who qualify First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week timeframe.
- The same goes for the pay and benefits for employees.
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are eligible for loan repayment if the loan is paid within an 8– 24 week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness once all loan proceeds for which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered, then PPP loan payments are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.