The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the current stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days of the bill being signed into law to simplify the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for PPP loan forgiveness within 24 days 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 the updated forms.”
First Draw PPP Loan forgiveness terms
What Is The Student Loan Forgiveness Program – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24-week covered period following the loan’s disbursement
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is repaid within an 8– 24 week period.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of the profits are spent on payroll costs
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.