The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage community banks to lend more, especially to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours of 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 published new forms.”
Forgiveness terms in the initial draw of PPP loans
Where Do I Send Teacher Loan Forgiveness Application – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24 week period that follows loan disbursement:
- The levels of compensation and employee pay are ensured
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week covered period following the loan’s disbursement
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan could be used to pay expenses for payroll or other eligible expenses.
- Minimum 60% of profits go towards payroll costs
- How and when to apply for loan forgiveness
Once all of the loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers can request forgiveness at any point up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.