The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. The law required that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 days 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 updated forms.”
Forgiveness terms for the initial draw of PPP loans
Fed Loans Forgiveness Program – For borrowers who are eligible, First Draw PPP loans can be suitable for loan forgiveness. This applies when the loan is disbursed within an 8 to 24 week period.
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment if the loan is paid within an 8– 24 week time frame.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds could be used to pay for expenses for payroll or other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loan payments can no longer deferred and borrowers will begin making loan payments to their PPP lender.
Download Fed Loans Forgiveness Program
Gallery of Fed Loans Forgiveness Program
