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 that are in line with the latest stimulus law.
Congress approved the COVID-19 relief package last month that included $284 billion of financing for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans 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 initial draw of PPP loans
Student Loans Forgiven If Work For Nonprofit – For eligible borrowers First Draw PPP loans are eligible to forgive loans. This happens if the loan disbursement occurs within an 8 to 24 week period.
- The levels of compensation and employee pay are kept at a constant level.
- The loan funds are used on payroll as well as other expenses eligible for reimbursement; and
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is paid within an 8– 24 week period.
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of profits are used for the cost of payroll
- How to apply for loan forgiveness and when
After all loan proceeds have been used The borrower may apply to be forgiven. The borrower can apply for forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the last day of the period covered the PPP loan payments are no longer deferred, and borrowers will begin making payment to their PPP lender.