The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and 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 also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the legislation being signed into law to simplify the procedure of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 days of 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 issued new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Public Service Loan Forgiveness Application For Forgiveness Form – For eligible borrowers, First Draw PPP loans can be qualified to forgive loans. This applies when the loan is disbursed within an 8 to 24 week period.
- The same goes for the pay and benefits for employees.
- The loan proceeds can be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan funds could be used to pay for the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of funds go to expenses for payroll
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the end of the time period that was covered the PPP loan payments can no longer deferred and borrowers will begin making loan payments to their PPP lender.