The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to comply with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. It also included conditions that encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 hours 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 new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Ri Student Loan Forgiveness Forms – For those who qualify, First Draw PPP loans are eligible to forgive loans. This applies if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for employee compensation and the.
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week duration following loan payment:
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
- How and when to apply for loan forgiveness
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.