The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 days of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness by 24 days after 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 new forms that were updated.”
Terms for forgiveness for the initial draw of PPP loans
Nyc Loan Forgiveness – For those who qualify First Draw PPP loans are eligible for loan forgiveness. This is when the loan payment is made within an 8– to 24-week period.
- The levels of compensation and employee pay are maintained
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week covered period following the loan’s disbursement
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
- What is the best time to apply for loan forgiveness
When all of the loan’s proceeds have been used the borrower is eligible to be forgiven. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.
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