The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the bill being adopted to make the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirement to issue the one page form for loan forgiveness under the PPP 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 Loan forgiveness terms
Great Lakes Higher Education Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified for loan forgiveness. This is when the loan payment is made within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– to 24 week time frame.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
Once all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.