The U.S. Small Business Administration released a one-page form that aims to simplify the application process to forgive Paycheck Protection Program loans, together with updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the bill being signed into law to simplify the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms that were updated.”
Forgiveness terms in the initial draw of PPP loans
Ohio Loan Forgiveness For Teachers – For eligible borrowers, First Draw PPP loans can be suitable to be forgiven. This applies when the loan is disbursed within an 8– to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the last day of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make payment to their PPP lender.