The U.S. Small Business Administration released a one-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released the updated forms.”
First Draw PPP Terms of loan forgiveness
Pa Teacher Loan Forgiveness Form – For those who qualify, First Draw PPP loans are suitable to forgive loans. This happens if the loan disbursement occurs within an 8 to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan funds are used on payroll and other expenses that are eligible and
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of the profits are used for the cost of payroll
- How do I request loan forgiveness and when
When all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can request forgiveness at any time until the date of maturity. If the borrower does not apply for forgiveness within 10 months after the end of the time period that was covered, then PPP loans are no longer deferred and borrowers will begin making monthly payments to their PPP lender.