The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the procedure of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loan Forgiveness For Teachers After 10 Years – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24 week period that follows loan disbursement:
- This is also true for pay and benefits for employees.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8– 24-week period.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to pay payroll costs or other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness and when
A borrower can apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.