The U.S. Small Business Administration has issued a one-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief package last month that included $284 billion of financing for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours of the signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more, especially to minority-owned businesses 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 publish the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment under 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.”
First Draw PPP Loan forgiveness terms
Teacher Student Loan Forgiveness Form – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24-week period after the loan’s disbursement
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week duration following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The proceeds of the loan could be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of funds go to payroll costs
- How to apply for loan forgiveness , and when
A borrower can apply for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.