The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of 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 reduce the economic burden of the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions to encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one page form for the forgiveness of PPP loans within 24 days 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 additional updated forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Calculation Form – For borrowers who are eligible First Draw PPP loans can be suitable to forgive loans. This is when the loan is disbursed within an 8 to 24 week period.
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8to 24 week period.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
- How do I apply for loan forgiveness and the time to apply
Once all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If they do not file for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers must make loan payments to their PPP lender.