The U.S. Small Business Administration issued a one-page application form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that conform to the requirements of the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned businesses that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the first draw of PPP loans
Teacher Loan Forgivness Forms – For those who qualify, First Draw PPP loans can be qualified to forgive loans. This applies when the loan payment is made within an 8– to 24-week timeframe.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The loan funds can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards expenses for payroll
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the last day of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.