The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the current stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the application process for forgiveness, along with conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that were unable to obtain loans last year.
“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 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 released more updated forms.”
Forgiveness terms for the first draw of PPP loans
University Of Phoenix Loan Forgiveness 2022 – For eligible borrowers First Draw PPP loans can be qualified to be forgiven. This happens when the loan is disbursed within an 8– to 24-week period.
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to pay for payroll costs or other eligible expenses.
- At least 60% of funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness if the loan is paid within an 8to 24 week period.
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll costs as well as other eligible expenses and
- A minimum of 60% of the proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive payment from their PPP lender.