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 is also updated with new forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus pandemic. The law required that the SBA issue 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 that had difficulty getting 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 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 issued more updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Cost – For borrowers who are eligible, First Draw PPP loans can be eligible to forgive loans. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- It’s the same for compensation and employees.
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following loan disbursement:
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
- How and when to apply for loan forgiveness
When all of the loan funds have been utilized The borrower may apply to be granted forgiveness. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.