The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. It also included conditions that encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans by 24 days after 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 the updated forms.”
Terms for forgiveness for the first draw of PPP loans
Public Service Loan Forgiveness Pslf Program – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24 week period that follows the loan’s disbursement
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week covered period following loan disbursement:
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other expenses that are eligible and
- At least 60% of profits are spent on payroll costs
- How do I request loan forgiveness and when to apply
Once all of the loan’s proceeds have been used The borrower may apply for forgiveness. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the end of the covered period the PPP loan payments can no longer deferred and borrowers must make loan payments to their PPP lender.