The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness within 24 hours of the date of enactment 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 updated forms.”
First Draw PPP Conditions for loan forgiveness
Schedule C Ppp Loan Forgiveness – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This is if the loan disbursement occurs within an 8– to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is paid within an 8– to 24-week period.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness , and when to apply
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are eligible to receive payment from their PPP lender.