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 the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that provided $284 billion of funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus epidemic. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirement of releasing 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 who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness For Parents Of Special Needs – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Pay and worker levels are ensured
- The loan proceeds are spent on payroll and other eligible expenses; and
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness when the loan is repaid within an 8to 24-week time frame.
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to the cost of payroll
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loan payments can not deferred any longer, and borrowers will begin making loan payments to their PPP lender.