The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. The law required that the SBA issue simplified forms within 24 hours of the signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that encourage community banks to lend more, especially to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness within 24 hours 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 released more updated forms.”
First Draw PPP Loan forgiveness terms
Public Interest Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be qualified to be forgiven. This happens if the loan disbursement occurs within an 8– to 24-week period.
- The same goes for the pay and benefits for employees.
- The proceeds of the loan can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8– 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the proceeds go to the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
After all loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are eligible to receive loan payments from their PPP lender.