The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions that encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirement to issue 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 published the updated forms.”
First Draw PPP Terms of loan forgiveness
Getting Phone Calls About Student Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24 week period that follows loan disbursement:
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.
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