The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 days of the date of enactment of 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 released new forms.”
First Draw PPP Terms of loan forgiveness
Student Aid Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24 week period that follows the disbursement of loan:
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible customers are eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of profits go towards expenses for payroll
- How do I apply for loan forgiveness , and when
A borrower may apply for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 years of the last day of the period covered and the loan is not renewed, PPP loan payments are no longer deferred, and the borrower will be required to make payment to their PPP lender.