The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus law.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions to 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 PPP loan forgiveness within 24 days of the date of the enactment of 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 released new forms.”
First Draw PPP Terms of loan forgiveness
Social Services Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week period after loan disbursement:
- The levels of compensation and employee pay are maintained
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of proceeds are used for the cost of payroll
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 time frame.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of funds go to the cost of payroll
- How and when to apply for loan forgiveness?
A borrower can apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are able to receive payment from their PPP lender.
Download Social Services Loan Forgiveness
Gallery of Social Services Loan Forgiveness
