The U.S. Small Business Administration has released a 1-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 current stimulus law.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. It also included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness within 24 days 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 more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Nursing Student Loan Forgiveness Iowa – For those who qualify First Draw PPP loans are qualified to be forgiven. This happens when the loan is disbursed within an 8 to 24-week period.
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week time period after the loan’s disbursement
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of the profits are spent on payroll costs
- When and how do I apply for loan forgiveness
Once all of the loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.
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