The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the current stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. Additionally, it included conditions to 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 requirements to release the single-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 issued more updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Act 2007 – For eligible borrowers First Draw PPP loans are eligible to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- This is also true for employee compensation and the.
- The proceeds from the loan may be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week covered period following loan payment:
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are used to pay for payroll expenses
- How do I request loan forgiveness and the time to apply
When all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered, then PPP loan payments are no longer deferred and the borrower will be required to make loan payments to their PPP lender.