The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, particularly for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Direct Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8-to 24-week period after loan disbursement:
- This is also true for compensation and employees.
- The loan proceeds are used on payroll and other eligible expenses; and
- Minimum 60% of funds go to expenses for 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 8– to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
- How to apply for loan forgiveness , and the time to apply
A borrower can apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers may apply for forgiveness at any time until the loan’s maturity date. 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.