The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the current stimulus law.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days of the bill being signed into law to simplify the process of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned companies that were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms for the initial draw of PPP loans
Navient Teacher Loan Forgiveness Address – For eligible borrowers First Draw PPP loans are qualified to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible customers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of profits go towards payroll costs
- How to apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.