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 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. The funds were used to reduce the economic burden of the coronavirus outbreak. The legislation required that the SBA release simplified forms within 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans 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 the updated forms.”
Forgiveness terms in the first draw of PPP loans
Student Loan Forgiveness For Nurses In Louisiana – For eligible borrowers First Draw PPP loans are qualified to forgive loans. This happens when the loan payment is made within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan proceeds could be used to cover expenses for payroll or other eligible expenses.
- Minimum 60% of proceeds go to the cost of payroll
- How to apply for loan forgiveness and when to apply
Once all of the loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan will be able to receive payment from their PPP lender.