The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the bill being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans 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 published the updated forms.”
Forgiveness terms in the first draw of PPP loans
Law Enforcement Student Loan Forgiveness – For those who qualify First Draw PPP loans are qualified for loan forgiveness. This happens if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the employee compensation and the.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– 24-week period.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness , and when
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive payment from their PPP lender.