The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses that struggled to get 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 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Loan forgiveness terms
United Employee Services Loan Forgiveness – For eligible borrowers First Draw PPP loans can be eligible for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan funds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is paid within an 8– 24 week period.
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of profits are used to pay for payroll expenses
- How to request loan forgiveness and the time to apply
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.