The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans within 24 hours of 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 released additional updated forms.”
First Draw PPP Loan forgiveness terms
Canada Student Loan Forgiveness Form – For those who qualify, First Draw PPP loans are qualified to forgive loans. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– 24 week period.
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The proceeds of the loan could be used to pay payroll costs or other expenses that are eligible.
- At least 60% of funds go to the cost of payroll
- How and when to apply for loan forgiveness?
A borrower can apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been utilized. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are eligible to receive payment from their PPP lender.