The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of 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 forgiven loans to help cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 days of the legislation being adopted to make the process of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 days of 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 published updated forms.”
Forgiveness terms for the first draw of PPP loans
What Is Pslf Loan Forgiveness – For eligible borrowers First Draw PPP loans can be suitable to forgive loans. This happens if the loan disbursement occurs within an 8– to 24-week timeframe.
- It’s the same for employee compensation and the.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan funds could be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
- How and when to apply for loan forgiveness
After all loan funds have been utilized the borrower is eligible to be granted forgiveness. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.