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. The form is also updated with new forms that comply with the most recent stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA provide simplified forms within 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. It also included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Terms of loan forgiveness
Ffel Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week period after loan disbursement:
- This is also true for compensation and employees.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the funds go to expenses for payroll
- How do I apply for loan forgiveness , and the time to apply
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any time until the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive the loan payment from their PPP lender.