The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. The funds were used to mitigate the economic effects of the coronavirus epidemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 hours of 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 released new forms.”
First Draw PPP Terms of loan forgiveness
How To Get Nursing Student Loans Forgiven – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This happens when the loan is disbursed within an 8 to 24 week period.
- Pay and worker levels are ensured
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be 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 employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds are used on payroll and other eligible expenses; and
- At least 60% of profits go towards expenses for payroll
- How and when to apply for loan forgiveness?
Once all of the loan proceeds have been used, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. If they do not file for forgiveness within 10 years of the date of expiration of the time period that was covered, then PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.