The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The legislation required that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP by 24 days after 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 the updated forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Application Video – For those who qualify First Draw PPP loans are suitable for loan forgiveness. This happens when the loan is disbursed within an 8– to 24 week period.
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is paid within an 8– 24 week time frame.
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds could be used to cover payroll costs or other expenses that are eligible.
- At least 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness and when
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any time until the loan’s maturity date. If they do not file for forgiveness within 10 months after the end of the covered period the PPP loan payments are no longer deferred, and the borrower will be required to make payment to their PPP lender.