The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirements to release the one 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 with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Loan Forgiveness For Attorneys – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week covered period following the disbursement of loan:
- It’s the same for compensation and employees.
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week time period after the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other eligible expenses; and
- A minimum of 60% of the profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness after all loan proceeds for which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the covered period, then PPP loans are no longer deferred and the borrower will be required to make loan payments to their PPP lender.