The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the application process for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 days 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 updated forms.”
Forgiveness terms for the initial draw of PPP loans
Wells Fargo Ppp Loan Forgiveness Online Application – For those who qualify, First Draw PPP loans can be suitable to be forgiven. This applies when the loan payment is made within an 8– to 24-week timeframe.
- This is also true for employee compensation and the.
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The proceeds of the loan could be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness , and when
After all loan proceeds have been used The borrower may apply for forgiveness. The borrower can 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 end of the period covered, then PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.