The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the most recent stimulus law.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the process of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment of 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 released additional updated forms.”
First Draw PPP Loan forgiveness terms
Working For Nonprofit And Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8 to 24 week period that follows loan disbursement:
- Pay and worker levels are kept at a constant level.
- 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
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of the proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the end of the covered period and the loan is not renewed, PPP loans are not deferred any longer, and borrowers must make payment to their PPP lender.