The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Loan forgiveness terms
Fedloan Teacher Loan Forgiveness Form – For those who qualify First Draw PPP loans can be qualified for loan forgiveness. This happens when the loan payment is made within an 8– to 24-week timeframe.
- Pay and worker levels are maintained
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- Minimum 60% of proceeds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll as well as other eligible expenses and
- Minimum 60% of profits go towards payroll costs
- When and how do I apply for loan forgiveness?
Once all of the loan funds have been utilized the borrower is eligible for forgiveness. Borrowers are able to apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the last day of the covered period and the loan is not renewed, PPP loans are not deferred any longer, and borrowers must make loan payments to their PPP lender.