The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, particularly for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 hours of the date of the 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 issued more updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Legit Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are qualified to forgive loans. This is when the loan payment is made within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of funds go to the cost of payroll
- How do I apply for loan forgiveness , and when
A borrower can apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the end of the time period that was covered, then PPP loans are no longer deferred, and borrowers must make monthly payments to their PPP lender.