The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The law required that the SBA release simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP 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 new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Ez Form Line 7 – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows loan disbursement:
- Pay and worker levels are maintained
- The loan proceeds are used on payroll costs and other eligible expenses; and
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
- The proceeds of the loan could be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards payroll costs
- How do I apply for loan forgiveness , and when
When all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive loan payments from their PPP lender.