The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 hours 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 more updated forms.”
Forgiveness terms in the first draw of PPP loans
Tsp Loan Forgiveness – For those who qualify, First Draw PPP loans are suitable to be forgiven. This happens when the loan payment is made within an 8 to 24 week period.
- It’s the same for employee compensation and the.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of the proceeds go to the cost of payroll
- How do I request loan forgiveness and the time to apply
When all of the loan’s proceeds have been used, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time up to the date of maturity. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are able to receive payment from their PPP lender.