The U.S. Small Business Administration released a one-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, along with newly revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The law 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. Additionally, it included conditions to encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP within 24 hours of the date of enactment 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 released more updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Canada Forgive Student Loans – For eligible borrowers, First Draw PPP loans can be suitable to forgive loans. This is when the loan payment is made within an 8 to 24-week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The proceeds of the loan could be used to cover expenses for payroll or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
- How and when to apply for loan forgiveness?
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.