The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Loan forgiveness terms
Schedule C PPP Loan Forgiveness Form – For those who qualify, First Draw PPP loans are suitable for loan forgiveness. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– to 24-week period.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness?
Once all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan will be able to receive loan payments from their PPP lender.