The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The law requires that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions to encourage community banks to make more loans particularly to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans within 24 hours of the date of enactment 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 updated forms.”
First Draw PPP Loan forgiveness terms
Discover Student Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness within the 8-to 24-week covered period following the loan’s disbursement
- Pay and worker levels are maintained
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The loan funds are used on payroll as well as other eligible expenses and
- At least 60% of profits go towards payroll costs
- When and how do I apply for loan forgiveness
Once all of the loan proceeds have been used The borrower may apply to be granted forgiveness. Borrowers may apply for forgiveness at any time until the loan’s maturity date. If they do not file for forgiveness within 10 months of the last day of the period covered and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers must make loan payments to their PPP lender.