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 that are in line with the most recent stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. It also included conditions that encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness by 24 days after 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 published additional updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Gov – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week covered period following the loan’s disbursement
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week duration following the loan’s disbursement
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
- How to apply for loan forgiveness and when to apply
After all loan proceeds have been used, a borrower can apply to be forgiven. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the period covered and the loan is not renewed, PPP loan payments are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.
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