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, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus pandemic. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 hours of the date of the 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 for the first draw of PPP loans
Parent Plus Student Loan Forgiveness Program – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8 to 24 week period that follows the disbursement of loan:
- This is also true for employee compensation and the.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are eligible for loan repayment when the loan is repaid within an 8– 24-week time frame.
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of the profits are spent on payroll costs
- How do I apply for loan forgiveness and when to apply
A borrower may apply for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 years of the end of the covered period and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers will begin making payment to their PPP lender.