The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived 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 law required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. It also included conditions that encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours of the date of the enactment of 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.”
Forgiveness terms for the first draw of PPP loans
Teacher Loan Forgiveness – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This is if the loan disbursement occurs within an 8– to 24-week timeframe.
- This is also true for compensation and employees.
- The proceeds from the loan may be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– to 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of profits are spent on payroll costs
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time until the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.