The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions meant to encourage more loans from community banks, especially for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirement of releasing the one-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 published updated forms.”
Forgiveness terms for the first draw of PPP loans
Permanent Disability Loan Forgiveness – For those who qualify, First Draw PPP loans can be qualified for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- It’s the same for pay and benefits for employees.
- The loan proceeds can be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness when the loan is paid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exactly the same manner.
- The loan proceeds could be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness?
When all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.
Download Permanent Disability Loan Forgiveness
Gallery of Permanent Disability Loan Forgiveness
