The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness by 24 days after the date of enactment 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 new forms.”
Forgiveness terms for the first draw of PPP loans
Liu Student Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows the loan’s disbursement
- This is also true for employee compensation and the.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8to 24 week period.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
After all loan’s proceeds have been used the borrower is eligible to be forgiven. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.