The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The law required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to lend more specifically to minority-owned companies 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 by 24 days after 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 issued additional updated forms.”
First Draw PPP Terms of loan forgiveness
Forgive Student Loans Worst Idea Ever – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are eligible for loan forgiveness if the loan is paid within an 8to 24-week period.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan funds can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of profits are used for the cost of payroll
- How do I request loan forgiveness and when
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness at any time prior to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loan payments are no longer deferred and borrowers must make payment to their PPP lender.