The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness by 24 days after the date of the 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 issued new forms.”
First Draw PPP Loan forgiveness terms
Usda Farm Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24-week covered period following the disbursement of loan:
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– to 24-week period.
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay payroll costs or other expenses that are eligible.
- At least 60% of funds go to the cost of payroll
- What is the best time to apply for loan forgiveness
After all loan’s proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the last day of the period covered the PPP loan payments can no longer deferred and borrowers must make monthly payments to their PPP lender.