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 to comply with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness within 24 days of the date of the enactment of 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 more updated forms.”
Forgiveness terms in the first draw of PPP loans
How To Apply For PPP Loan Forgiveness Online – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8 to 24-week period after the loan’s disbursement
- The levels of compensation and employee pay are kept at a constant level.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8to 24-week time frame.
- Employee and compensation levels are maintained in the same way as is 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 the proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness?
When all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.