The U.S. Small Business Administration has issued a one-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the signing into law. This was done to facilitate the application 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, stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Loan forgiveness terms
Sc Teachers Loan Forgiveness Form – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8- to 24 week period that follows the disbursement of loan:
- The same goes for the compensation and employees.
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of profits go towards payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week time period after the loan’s disbursement
- The levels of compensation and employee pay are kept in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the last day of the period covered, then PPP loan payments can no longer deferred and the borrower will be required to make monthly payments to their PPP lender.