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. It also includes newly revised forms to comply with the most recent stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days of the legislation being signed into law to simplify the application process for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who struggled to get loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP by 24 days after the date of the 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 published new forms.”
First Draw PPP Loan forgiveness terms
Student Loan Stimulus Forgiveness – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This applies if the loan disbursement occurs within an 8– to 24-week period.
- It’s the same for pay and benefits for employees.
- The proceeds from the loan may be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week duration following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- At least 60% of profits are used to pay for payroll expenses
- How to apply for loan forgiveness , and when
When all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 months of the end of the time period that was covered, then PPP loans are not deferred any longer, and borrowers must make payment to their PPP lender.