The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP within 24 hours of the date of the 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 released the updated forms.”
First Draw PPP Conditions for loan forgiveness
Will The Government Forgive Student Loans – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24 week period that follows the loan’s disbursement
- This is also true for pay and benefits for employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- Minimum 60% of proceeds go to payroll costs
- How to apply for loan forgiveness and when to apply
A borrower may apply 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 the borrower does not apply for forgiveness within 10 years of the date of expiration of the period covered the PPP loans are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.