The U.S. Small Business Administration has released a 1-page form that simplifies the application 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 passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the application process for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness by 24 days after the date of enactment of 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 updated forms.”
Terms for forgiveness for the first draw of PPP loans
What Jobs Qualify For Public Service Loan Forgiveness – For those who qualify First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8– to 24-week period.
- The levels of compensation and employee pay are ensured
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits go towards 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 total loan forgiveness if they do so during the 8to 24 week time period after the loan’s disbursement
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the proceeds are spent on payroll costs
- When and how do I apply for loan forgiveness
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are able to receive the loan payment from their PPP lender.
Download What Jobs Qualify For Public Service Loan Forgiveness
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