The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms in the initial draw of PPP loans
Student Loan Forgiveness Programs For Pharmacists – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24-week covered period following the loan’s disbursement
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified customers are eligible for loan repayment if the loan is paid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The proceeds of the loan could be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of funds go to expenses for payroll
- How and when to apply for loan forgiveness
After all loan proceeds have been used, a borrower can apply for forgiveness. Borrowers may apply for forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.