The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the most recent stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 hours of 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 released updated forms.”
Forgiveness terms in the first draw of PPP loans
What Is A Forgivable Ppp Loan – For those who qualify First Draw PPP loans can be qualified to forgive loans. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan funds are used on payroll and other expenses that are eligible and
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible customers are eligible for loan repayment if the loan is paid within an 8– 24 week period.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of profits go towards payroll costs
- How to request loan forgiveness and when to apply
Once all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months after the end of the period covered, then PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.
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