The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to lend more, especially to minority-owned businesses that had difficulty getting 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 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 issued new forms that were updated.”
First Draw PPP Loan forgiveness terms
Can Parent Plus Loans Be Forgiven – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24 week period that follows loan disbursement:
- The levels of compensation and employee pay are maintained
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is paid within an 8– to 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan funds are used on payroll costs as well as other eligible expenses and
- At least 60% of funds go to the cost of payroll
- How to apply for loan forgiveness , and the time to apply
After all loan funds have been utilized The borrower may apply for forgiveness. Borrowers may apply for 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 the PPP loans are no longer deferred and the borrower will be required to make loan payments to their PPP lender.