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 are in line with the current stimulus law.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus epidemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 hours of 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.”
Forgiveness terms in the initial draw of PPP loans
Loan Forgiveness Nc – For borrowers who are eligible First Draw PPP loans can be qualified for loan forgiveness. This is when the loan payment is made within an 8– to 24-week period.
- It’s the same for employee compensation and the.
- The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan funds could be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to the cost of payroll
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan will be able to receive the loan payment from their PPP lender.