The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the bill being adopted to make the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that struggled to get loans in the past.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans by 24 days after the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
Forgiveness terms in the first draw of PPP loans
Teacher Loan Forgiveness Application Pdf – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24-week covered period following the disbursement of loan:
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is repaid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The proceeds of the loan could be used to pay for the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards payroll costs
- How do I apply for loan forgiveness and when to apply
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. The borrower can request forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.