The U.S. Small Business Administration issued a one-page application form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more, especially to minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans by 24 days after 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 issued more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Uncf Wear Your Crown With Confidence Loan Forgiveness – For eligible borrowers First Draw PPP loans can be suitable to be forgiven. This happens if the loan disbursement occurs within an 8 to 24-week period.
- Pay and worker levels are maintained
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of funds go to payroll costs
- How to apply for loan forgiveness , and when to apply
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.