The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirements to release the one page form for loan forgiveness under the PPP within 24 days of the date of the 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 issued more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Pslf Loan Forgiveness Mn Form – For borrowers who are eligible First Draw PPP loans can be qualified for loan forgiveness. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of funds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is repaid within an 8– to 24 week period.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to cover payroll costs or other expenses that are eligible.
- At least 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been utilized. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.