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, along with newly updated and revised forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. It also included conditions that encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms in the first draw of PPP loans
Direct Loans Loan Forgiveness For Teachers – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24-week period after the loan’s disbursement
- This is also true for pay and benefits for employees.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week duration following loan payment:
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll as well as other eligible expenses and
- A minimum of 60% of the profits are used to pay for payroll expenses
- How do I apply for loan forgiveness and when
A borrower can apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any point up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loans are no longer deferred, and borrowers will begin making payment to their PPP lender.
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