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, along with newly revised and updated forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours after the legislation was adopted to make the procedure of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned companies that struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Loan forgiveness terms
Loan Debt Forgiveness – For those who qualify First Draw PPP loans are suitable to be forgiven. This happens when the loan payment is made within an 8 to 24-week timeframe.
- It’s the same for pay and benefits for employees.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan proceeds could be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
- When and how do I apply for loan forgiveness?
After all loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers can request forgiveness at any time until the loan’s maturity date. 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.