The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, 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 package also mandated the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the process of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for loan forgiveness under the PPP within 24 days of the date of 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 published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Loan Forgiveness Programs 2022 – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week period after loan disbursement:
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- At least 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week time period after the loan’s disbursement
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The proceeds of the loan could be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of funds go to expenses for payroll
- How to apply for loan forgiveness and when
Once all of the loan’s proceeds have been used The borrower may apply to be forgiven. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.