The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the bill being 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 that were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness by 24 days after the date of enactment 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 published new forms.”
First Draw PPP Loan forgiveness terms
Married Filing Separately Student Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week period.
- It’s the same for compensation and employees.
- The proceeds from the loan may be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week time period after the loan’s disbursement
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds can 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 to which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any time until the date of maturity. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.