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 that meet the requirements of the latest stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned companies that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP 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 published new forms.”
Terms for forgiveness for the first draw of PPP loans
Federal Student Loan Forgiveness For Teachers 10 Years – For those who qualify, First Draw PPP loans are qualified for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week timeframe.
- It’s the same for compensation and employees.
- The loan funds are used on payroll expenses and other eligible expenses; and
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan funds can be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the end of the period covered the PPP loans are no longer deferred and the borrower will be required to make payment to their PPP lender.