The U.S. Small Business Administration released a one-page form aimed at simplifying the application process to forgive Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable 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 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans by 24 days after the date of enactment of 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 new forms that were updated.”
First Draw PPP Loan forgiveness terms
Teacher Loan Forgiveness Form Gwinnett County Public Schools – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24-week period after the loan’s disbursement
- Employee and compensation levels are maintained
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers are 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 are maintained in the exactly the same manner.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of profits go towards payroll costs
- How to apply for loan forgiveness and when
Once all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the end of the time period that was covered and the loan is not renewed, PPP loan payments can not deferred any longer, and borrowers must make monthly payments to their PPP lender.