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 revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Sc Teacher Loan Forgiveness Form – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This happens when the loan payment is made within an 8– to 24-week period.
- The same goes for the compensation and employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8to 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 exact same way.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of proceeds go to payroll costs
- How to apply for loan forgiveness , and the time to apply
Once 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 loan’s maturity date. If they do not file for forgiveness within 10 years of the date of expiration of the covered period, then PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.