The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of 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 Conditions for loan forgiveness
Plus Loan Forgiveness For Parent – For those who qualify, First Draw PPP loans are eligible to be forgiven. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week covered period following loan disbursement:
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of profits are used to pay for payroll expenses
- How do I request loan forgiveness and when
After all loan funds have been utilized, a borrower can apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the covered period the PPP loan payments can no longer deferred, and borrowers will begin making payment to their PPP lender.