The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the application process for forgiveness, along with conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Does Teach For America Forgive Student Loans – For eligible borrowers, First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan is disbursed within an 8 to 24 week period.
- The same goes for the compensation and employees.
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of funds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8to 24 week period.
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds go to the cost of payroll
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any time until the loan’s maturity date. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.