The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The legislation required that the SBA release simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms.”
Forgiveness terms for the first draw of PPP loans
Is Ppp Loan Forgiveness Taxable – For eligible borrowers, First Draw PPP loans can be eligible to forgive loans. This happens when the loan payment is made within an 8 to 24 week period.
- It’s the same for compensation and employees.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week time period after the loan’s disbursement
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The proceeds of the loan could be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness and when
When all of the loan funds have been utilized The borrower may apply to be forgiven. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are able to receive the loan payment from their PPP lender.