The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus outbreak. The law requires that the SBA issue simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. It also included conditions that encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans by 24 days after 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 published more updated forms.”
First Draw PPP Terms of loan forgiveness
Sba Loan Forgiveness Portal – For those who qualify, First Draw PPP loans are suitable to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- It’s the same for employee compensation and the.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is paid within an 8– 24 week period.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness
A borrower may apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months of the last day of the time period that was covered, then PPP loan payments can not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.