The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus law.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to make it easier to apply for forgiveness. It also included conditions that encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness by 24 days after the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
Forgiveness terms for the first draw of PPP loans
Teacher Loan Forgiveness Form Address – For eligible borrowers, First Draw PPP loans can be suitable to be forgiven. This is when the loan payment is made within an 8– to 24-week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
- How to request loan forgiveness and when to apply
Once all of the loan proceeds have been used The borrower may apply to be granted forgiveness. Borrowers can request forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the end of the period covered, then PPP loan payments are not deferred any longer, and the borrower will be required to make payment to their PPP lender.