The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, particularly for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirements to release the one page form for loan forgiveness under the PPP by 24 days after the date of 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 released new forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Phone Number – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following the disbursement of loan:
- The levels of compensation and employee pay are maintained
- The loan proceeds are used on payroll as well as other expenses eligible for reimbursement; and
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week time period after loan payment:
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds could be used to cover payroll costs or other eligible expenses.
- At least 60% of profits are used for the cost of payroll
- How and when to apply for loan forgiveness
After all loan funds have been utilized, a borrower can apply for forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loan payments can no longer deferred and the borrower will be required to make monthly payments to their PPP lender.