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 comply with the latest 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 forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being signed into law to simplify the process of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans 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 Terms of loan forgiveness
Who Qualifies For PPP Loan Forgiveness Application Form 3508ez – For eligible borrowers, First Draw PPP loans are suitable to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- The same goes for the pay and benefits for employees.
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
- How and when to apply for loan forgiveness?
A borrower can apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months of the last day of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred, and the borrower will be required to make payment to their PPP lender.
Download Who Qualifies For PPP Loan Forgiveness Application Form 3508ez
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