The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law requires that the SBA release simplified forms within 24 hours of the signing into law. This was to make it easier to apply for forgiveness. It also included conditions that encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Will My Ppp Loan Be Forgiven – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week period after the loan’s disbursement
- Pay and worker levels are maintained
- The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
- At least 60% of funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are eligible for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness , and when
Once all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers can request forgiveness at any time until the loan’s maturity date. If they do not file for forgiveness within 10 years of the date of expiration of the period covered and the loan is not renewed, PPP loans are no longer deferred and borrowers must make monthly payments to their PPP lender.