The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 hours 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 released updated forms.”
First Draw PPP Loan forgiveness terms
Ecf Form Public Service Loan Forgiveness – For those who qualify, First Draw PPP loans are qualified to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are ensured
- The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week time period after the loan’s disbursement
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of profits are used to pay for payroll expenses
- How do I apply for loan forgiveness and the time to apply
When all of the loan’s proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months of the last day of the period covered and the loan is not renewed, PPP loan payments can not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.