The U.S. Small Business Administration has released a single-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours after the legislation was adopted to make the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one-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 at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Loan forgiveness terms
Will Student Loan Forgiveness Raise Taxes – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24-week covered period following loan disbursement:
- This is also true for employee compensation and the.
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week duration following the loan’s disbursement
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan funds could be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the funds go to expenses for payroll
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 months after the end of the covered period, then PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.