The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want 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 after the bill’s passage into law. This was to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness by 24 days after the date of the enactment of 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 issued new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Premier Student Loan Forgiveness Reviews – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness within the 8 to 24-week covered period following the loan’s disbursement
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan repayment when the loan is repaid within an 8– to 24-week period.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds can be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of profits go towards payroll costs
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any time until the date at which the loan matures. If they do not file for forgiveness within 10 years of the end of the covered period and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.