The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the current stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours of the signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that encourage community banks to make more loans 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 the forgiveness of PPP loans by 24 days after the date of the enactment of 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 issued new forms.”
Terms for forgiveness for the initial draw of PPP loans
How To Fill Out Ppp Loan Forgiveness Application – For borrowers who are eligible First Draw PPP loans can be suitable to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified customers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
Once all of the loan funds have been utilized The borrower may apply for forgiveness. Borrowers can apply for forgiveness any time up 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 covered period, then PPP loans are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.
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