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 to forgive 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 included $284 billion of financing to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Loan forgiveness terms
Perkins Loan Forgiveness Form – For those who qualify, First Draw PPP loans can be suitable for loan forgiveness. This applies when the loan payment is made within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week duration following the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to payroll costs
- How to apply for loan forgiveness and when to apply
A borrower may apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any point up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.