The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms that comply with the current stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the application process for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, specifically for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans within 24 hours of 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 published additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Teacher Loan Forgiveness Form Nelnet – For eligible borrowers First Draw PPP loans can be qualified to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week time period after loan disbursement:
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of funds go to payroll costs
- How to apply for loan forgiveness , and when
A borrower may apply for forgiveness once all loan proceeds to which the borrower wants forgiveness have been used. The borrower can request forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the end of the period covered and the loan is not renewed, PPP loan payments can no longer deferred and borrowers must make monthly payments to their PPP lender.