The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the process of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued additional updated forms.”
Forgiveness terms in the initial draw of PPP loans
Teacher Form For Student Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness within the 8 to 24 week period that follows the loan’s disbursement
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds go to payroll costs
- How do I apply for loan forgiveness , and the time to apply
Once all of the loan proceeds have been used, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the end date of the loan are eligible to receive the loan payment from their PPP lender.