The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 hours of the bill being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness by 24 days after 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 issued updated forms.”
First Draw PPP Loan forgiveness terms
Documents Needed For Ppp Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness within the 8 to 24-week period after loan disbursement:
- The same goes for the compensation and employees.
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the end of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred and the borrower will be required to make payment to their PPP lender.
Download Documents Needed For Ppp Loan Forgiveness
Gallery of Documents Needed For Ppp Loan Forgiveness
