The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new 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 that needed loans. This money was used to mitigate the economic effects of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for loan forgiveness under the PPP by 24 days after the date of enactment of 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 issued more updated forms.”
First Draw PPP Conditions for loan forgiveness
Loan Forgiveness For Police Officers – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24-week period after the disbursement of loan:
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week duration following loan payment:
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The loan funds could be used to pay payroll costs or other eligible expenses.
- At least 60% of the proceeds are used for the cost of payroll
- How to request loan forgiveness and when
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.