The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. The legislation also contained conditions to encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 hours of the date of enactment 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 more updated forms.”
First Draw PPP Terms of loan forgiveness
Pete Buttigieg On Student Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24 week period that follows the disbursement of loan:
- It’s the same for employee compensation and the.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan payment:
- Employee and compensation levels 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 expenses that are eligible and
- At least 60% of profits are spent on payroll costs
- How do I apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been used. The borrower can request forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.