The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 days of the date of enactment 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 issued more updated forms.”
First Draw PPP Loan forgiveness terms
Who Pays For Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week covered period following loan disbursement:
- It’s the same for compensation and employees.
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week covered period following the loan’s disbursement
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of proceeds go to the cost of payroll
- What is the best time to apply for loan forgiveness
Once all of the loan’s proceeds have been used, a borrower can apply for forgiveness. The borrower can request forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are eligible to receive loan payments from their PPP lender.
Download Who Pays For Loan Forgiveness
Gallery of Who Pays For Loan Forgiveness
