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 comply with the most recent stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. The law required that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the one page form for loan forgiveness under the PPP within 24 hours of 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 published more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Fedloan Public Service Loan Forgiveness Phone Number – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week period after the disbursement of loan:
- It’s the same for employee compensation and the.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
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 duration following the loan’s disbursement
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of proceeds are spent on payroll costs
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loan payments can not deferred any longer, and borrowers must make monthly payments to their PPP lender.