The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. It also included conditions to encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“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 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 released the updated forms.”
First Draw PPP Conditions for loan forgiveness
Social Work Loan Forgiveness California – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week covered period following the disbursement of loan:
- It’s the same for compensation and employees.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exact same way.
- The loan funds could be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments can no longer deferred and borrowers must make monthly payments to their PPP lender.