The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms that 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 forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The law required that the SBA release simplified forms within the first 24 hours of the signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated 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 the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
Forgiveness terms for the initial draw of PPP loans
Inner City Teacher Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following the disbursement of loan:
- The same goes for the pay and benefits for employees.
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- How to request loan forgiveness and when to apply
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 years of the last day of the time period that was covered the PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.