The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the most recent 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 outbreak. It included a requirement for the SBA to issue simplified forms within 24 hours of the bill being adopted to make the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness by 24 days after the date of enactment 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 additional updated forms.”
Forgiveness terms in the first draw of PPP loans
PPP Loan Forgiveness Form For Independent Contractors – For borrowers who are eligible, First Draw PPP loans are qualified to be forgiven. This happens when the loan is disbursed within an 8– to 24 week period.
- It’s the same for employee compensation and the.
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of the profits are spent on payroll costs
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any time until the date of maturity. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.
Download PPP Loan Forgiveness Form For Independent Contractors
Gallery of PPP Loan Forgiveness Form For Independent Contractors
