The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which 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 24 hours after the legislation was adopted to make the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, specifically for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the one page form for loan forgiveness under the PPP by 24 days after 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 published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Will There Be Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following the disbursement of loan:
- This is also true for employee compensation and the.
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of the profits are spent on payroll costs
- How to request loan forgiveness and when to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can request forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan will be able to receive loan payments from their PPP lender.