The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness by 24 days after 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 published new forms that were updated.”
First Draw PPP Loan forgiveness terms
How To Apply For Forgiveness Of Ppp Loan – For those who qualify First Draw PPP loans can be eligible to forgive loans. This applies when the loan is disbursed within an 8– to 24-week period.
- Pay and worker levels are maintained
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment if the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan funds could be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
- How and when to apply for loan forgiveness?
Once all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.