The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the current stimulus law.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans within 24 hours of the date of enactment 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 issued updated forms.”
First Draw PPP Loan forgiveness terms
Slac Student Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24-week period after loan disbursement:
- The levels of compensation and employee pay are ensured
- 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 payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exact same way.
- The loan funds are used on payroll expenses as well as other eligible expenses and
- At least 60% of proceeds go to the cost of payroll
- How to apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 years of the last day of the covered period the PPP loans are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.