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, along with newly revised and updated forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and included $284 billion of financing to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. It also included conditions to 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 of releasing the single-page form for the forgiveness of PPP loans within 24 hours of 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 published more updated forms.”
Forgiveness terms for the initial draw of PPP loans
Why Can’t Former Itt Tech Students Have Their Loans Forgiven – For those who qualify First Draw PPP loans can be qualified to forgive loans. This happens if the loan disbursement occurs within an 8– to 24 week period.
- Employee and compensation levels are ensured
- The proceeds of the loan can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of funds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness
When all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any time up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loan payments can no longer deferred and borrowers must make loan payments to their PPP lender.