The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote 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 the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Where Do I Send My Teacher Loan Forgiveness Form – For those who qualify First Draw PPP loans are suitable to be forgiven. This applies if the loan disbursement occurs within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is paid within an 8– to 24-week time frame.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are used for the cost of payroll
- How to request loan forgiveness and the time to apply
When all of the loan proceeds have been used The borrower may apply for forgiveness. Borrowers can request forgiveness at any time up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.