The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the application process for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses who struggled to get loans in the past.
“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 of 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 published the updated forms.”
First Draw PPP Terms of loan forgiveness
Loan Forgiveness Disabled Vets – For borrowers who are eligible First Draw PPP loans are suitable to forgive loans. This happens when the loan payment is made within an 8 to 24 week period.
- It’s the same for pay and benefits for employees.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible customers are qualified for loan forgiveness if the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits are used for the cost of payroll
- When and how do I apply for loan forgiveness
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the end of the period covered the PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.