The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for forgiveness of 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 last month and offered $284 billion in funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness within 24 days of the date of the 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 that were updated.”
First Draw PPP Conditions for loan forgiveness
Title 1 Schools In Texas Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be suitable to be forgiven. This applies when the loan is disbursed within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week time period after the loan’s disbursement
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of profits go towards payroll costs
- How and when to apply for loan forgiveness?
The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been utilized. The borrower can request forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the covered period the PPP loan payments can not deferred any longer, and the borrower will be required to make payment to their PPP lender.