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 also contains newly updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed 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 after the legislation was signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirement to issue 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 released updated forms.”
First Draw PPP Loan forgiveness terms
Loan Forgiveness Scam Calls – For those who qualify First Draw PPP loans can be eligible to forgive loans. This happens if the loan disbursement occurs within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
- How do I apply for loan forgiveness and the time to apply
Once all of the loan proceeds have been used, a borrower can apply for forgiveness. 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 month of the expiration date of the loan are able to receive payment from their PPP lender.