The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was signed into law to simplify the application process for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirements to release 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, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Application Portal – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This happens if the loan disbursement occurs within an 8– to 24-week period.
- It’s the same for compensation and employees.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is repaid within an 8– to 24 week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds go to payroll costs
- How do I request loan forgiveness and when
A borrower can apply for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.