The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 hours of the date of 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 published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Application Instructions – For those who qualify, First Draw PPP loans can be suitable to be forgiven. This is when the loan payment is made within an 8– to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan funds are used on payroll costs and other eligible expenses; and
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of profits are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
When all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are able to receive payment from their PPP lender.