The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. It also included conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Teacher Student Loan Forgiveness Form 2015 – For eligible borrowers First Draw PPP loans are suitable for loan forgiveness. This applies when the loan is disbursed within an 8– to 24 week period.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of profits go towards the cost of payroll
- When and how do I apply for loan forgiveness
After all loan funds have been utilized the borrower is eligible to be forgiven. The borrower can request forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the end of the time period that was covered the PPP loans are not deferred any longer, and the borrower will be required to make payment to their PPP lender.