The U.S. Small Business Administration released a one-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus outbreak. The law required that the SBA provide simplified forms within 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness within 24 hours of the date of the 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 released new forms that were updated.”
Forgiveness terms in the initial draw of PPP loans
Loan Forgiveness For Nurses 2022 – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness within the 8 to 24 week period that follows the loan’s disbursement
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week duration following the loan’s disbursement
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
- How to request loan forgiveness and when
After all loan proceeds have been used the borrower is eligible to be forgiven. Borrowers can request forgiveness at any time until the date of maturity. If the borrower does not apply for forgiveness within 10 years of the last day of the covered period, then PPP loan payments can no longer deferred and borrowers will begin making payment to their PPP lender.