The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the bill being signed into law to simplify the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the one page form for loan forgiveness under the PPP within 24 days of the date of the 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 issued new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Loan Forgiveness Jobs – For those who qualify First Draw PPP loans are suitable for loan forgiveness. This is when the loan is disbursed within an 8 to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are eligible for loan forgiveness if the loan is paid within an 8to 24-week period.
- 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 for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
- How do I apply for loan forgiveness and when to apply
Once all of the loan’s proceeds have been used the borrower is eligible to be forgiven. The borrower can request forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the end of the covered period the PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.