The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours from the date of enactment under 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.”
Terms for forgiveness for the first draw of PPP loans
Teacher Loan Forgiveness Fedloan Form – For borrowers who are eligible, First Draw PPP loans can be eligible for loan forgiveness. This applies when the loan payment is made within an 8– to 24-week timeframe.
- It’s the same for compensation and employees.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- How to request loan forgiveness and the time to apply
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. The borrower can request forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 years of the end of the period covered, then PPP loans are no longer deferred and borrowers must make loan payments to their PPP lender.