The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the latest stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who had trouble getting loans in the past.
“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, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
Forgiveness terms for the first draw of PPP loans
Teacher Shortage Loan Forgiveness Minnesota – For those who qualify, First Draw PPP loans can be eligible for loan forgiveness. This applies if the loan disbursement occurs within an 8 to 24 week period.
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
- How to apply for loan forgiveness and when to apply
Once all of the loan funds have been utilized, a borrower can apply for forgiveness. Borrowers can request forgiveness at any time until the loan’s maturity date. Borrowers who do not request forgiveness within 10 month of the end date of the loan will be able to receive payment from their PPP lender.
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