The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the procedure of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness 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 published the updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Ppp Loan Forgiveness Calculator – For borrowers who are eligible, First Draw PPP loans are qualified to forgive loans. This happens when the loan payment is made within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are ensured
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible customers are eligible for loan forgiveness when the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds go to payroll costs
- What is the best time to apply for loan forgiveness
When all of the loan proceeds have been used The borrower may apply to be forgiven. The borrower can apply for forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.