The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the bill being signed into law to simplify the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 hours 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 the updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loan Forgiveness Married Filing Separately – For borrowers who are eligible First Draw PPP loans can be suitable for loan forgiveness. This happens when the loan is disbursed within an 8– to 24-week timeframe.
- It’s the same for pay and benefits for employees.
- The proceeds from the loan may be used to pay payroll costs or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is paid within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay for the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are able to receive loan payments from their PPP lender.