The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the latest stimulus law.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within the first 24 hours of the bill being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that were unable to obtain 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 days of 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 published new forms that were updated.”
First Draw PPP Loan forgiveness terms
Td Bank Ppp Loan Forgiveness – 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 period after the disbursement of loan:
- The levels of compensation and employee pay are ensured
- The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the profits go towards the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- At least 60% of proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness
After all loan proceeds have been used the borrower is eligible to be forgiven. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the end of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers must make loan payments to their PPP lender.