The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. It also included conditions to encourage community banks to lend more specifically to minority-owned companies who were unable to obtain 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 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Form 2014 – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week covered period following loan disbursement:
- It’s the same for employee compensation and the.
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week time period after loan payment:
- Pay and worker levels are maintained in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of proceeds are used for the cost of payroll
- How to request loan forgiveness and when
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.