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 also contains newly updated forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the procedure of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, especially for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Loan forgiveness terms
Teacher Loan Forgiveness Form 2019 – First Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24 week period that follows the loan’s disbursement
- Pay and worker levels are maintained
- The loan funds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified customers are eligible for loan repayment when the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness and when to apply
A borrower may apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the last day of the covered period the PPP loan payments can no longer deferred and borrowers will begin making payment to their PPP lender.