The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially 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 days of the date of 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 updated forms.”
First Draw PPP Loan forgiveness terms
Is Forgiving Student Loan Debt A Good Idea Essay – For borrowers who are eligible First Draw PPP loans can be eligible to forgive loans. This is when the loan is disbursed within an 8– to 24-week period.
- Employee and compensation levels are maintained
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week duration following loan disbursement:
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to pay payroll costs or other eligible expenses.
- At least 60% of profits are spent on payroll costs
- When and how do I apply for loan forgiveness?
When all of the loan funds have been utilized, a borrower can apply for forgiveness. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If they do not file for forgiveness within 10 months of the last day of the covered period and the loan is not renewed, PPP loan payments are no longer deferred, and the borrower will be required to make payment to their PPP lender.