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 for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing for small-scale businesses who needed loans. The funds were used to mitigate the economic effects of the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing 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 updated forms.”
First Draw PPP Terms of loan forgiveness
Public Employee Student Loan Forgiveness Form – For those who qualify First Draw PPP loans can be qualified to forgive loans. This applies if the loan disbursement occurs within an 8 to 24 week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if 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 an exact same way.
- The loan proceeds could be used to pay expenses for payroll or other expenses that are eligible.
- Minimum 60% of profits go towards the cost of payroll
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness after all loan proceeds to which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If they do not file for forgiveness within 10 years of the date of expiration of the period covered, then PPP loans are no longer deferred and borrowers must make payment to their PPP lender.