The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 days of the bill being adopted to make the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who struggled to get 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 who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Apply For Loan Forgiveness Teacher – For borrowers who are eligible First Draw PPP loans are qualified for loan forgiveness. This is when the loan payment is made within an 8– to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8– 24 week time frame.
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness and when to apply
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.