The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the process of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 hours of the date of enactment 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.”
Forgiveness terms in the first draw of PPP loans
Student Loan Forgiveness Form 2022 – For eligible borrowers, First Draw PPP loans are suitable to forgive loans. This is if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for employee compensation and the.
- The loan funds are used on payroll and other eligible expenses; and
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week time period after loan payment:
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan funds could be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits go towards payroll costs
- How to apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any time until the date of maturity. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the covered period the PPP loans are no longer deferred and borrowers must make loan payments to their PPP lender.