The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment of 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 new forms.”
First Draw PPP Terms of loan forgiveness
Ppp Loan Forgiveness Ez Form – For eligible borrowers, First Draw PPP loans can be eligible to be forgiven. This applies if the loan disbursement occurs within an 8 to 24-week timeframe.
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The proceeds of the loan could be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
- How to apply for loan forgiveness and when
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 years of the end of the covered period the PPP loan payments are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.