The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirements to release the one page form for the forgiveness of PPP loans within 24 days of the date of the 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 published new forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness For Disabled Veterans Eligibility – For eligible borrowers First Draw PPP loans can be qualified to be forgiven. This is if the loan disbursement occurs within an 8– to 24 week period.
- Pay and worker levels are maintained
- The loan proceeds can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week covered period following loan payment:
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of profits go towards the cost of payroll
- How and when to apply for loan forgiveness?
After all loan’s proceeds have been used the borrower is eligible to be forgiven. The borrower can apply for forgiveness at any time until the date at which the loan matures. Borrowers who don’t request 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.