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 latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus outbreak. 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. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that were unable to obtain loans last year.
“The Small Business Administration met the requirements to release 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
Trinity Grad Counseling Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week period after the loan’s disbursement
- It’s the same for compensation and employees.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
- How to request loan forgiveness and when to apply
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan are eligible to receive loan payments from their PPP lender.