The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of 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 forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The law requires that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness within 24 days of the date of enactment 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 issued new forms.”
Terms for forgiveness for the first draw of PPP loans
Forgivable Ppp Loan 2022 – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs within an 8– to 24 week period.
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are eligible to receive loan payments from their PPP lender.