The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus pandemic. The law requires that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. It also included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Loan forgiveness terms
Uheaa Teacher Loan Forgiveness Deferrment Form – For those who qualify, First Draw PPP loans are suitable for loan forgiveness. This is when the loan payment is made within an 8 to 24 week period.
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness if the loan is paid within an 8– 24 week period.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness and the time to apply
Once all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.