The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, particularly for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness by 24 days after the date of the 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 published more updated forms.”
Forgiveness terms in the first draw of PPP loans
Student Loan Forgiveness Calls Legit – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This is when the loan is disbursed within an 8 to 24-week timeframe.
- Pay and worker levels are maintained
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week time period after the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- 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
- How to apply for loan forgiveness , and when
After all loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.