The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the current stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. The law requires that the SBA issue simplified forms within 24 hours of the signing into law. This is to facilitate the application for forgiveness. It also included conditions that would encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the one page form for loan forgiveness under the PPP within 24 hours of the date of enactment of 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 released updated forms.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness Phone Calls – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24-week covered period following loan disbursement:
- It’s the same for employee compensation and the.
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified customers are eligible for loan forgiveness if the loan is paid within an 8to 24-week time frame.
- Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds go to the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.