The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for loan forgiveness under the PPP within 24 hours of the date of enactment 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 released additional updated forms.”
Forgiveness terms in the initial draw of PPP loans
Va Disability Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week period.
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exact same way.
- The loan funds could be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of profits go towards expenses for payroll
- How to apply for loan forgiveness , and the time to apply
After all loan proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.