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 comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to mitigate the economic effects of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue 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 published the updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Student Loan Forgiveness For 100 Disabled Veterans Spouse – For those who qualify, First Draw PPP loans are suitable to forgive loans. This happens if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for compensation and employees.
- The loan proceeds are used on payroll and other expenses that are eligible and
- At least 60% of funds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is paid within an 8– 24-week period.
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness?
When all of the loan proceeds have been used The borrower may apply to be granted forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.