The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP 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 updated forms.”
Forgiveness terms in the first draw of PPP loans
Where To Send Teacher Loan Forgiveness Application – For those who qualify, First Draw PPP loans are eligible for loan forgiveness. This applies if the loan disbursement occurs within an 8– to 24 week period.
- This is also true 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 spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
- How to request loan forgiveness and the time to apply
After all loan funds have been utilized The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 months after the end of the time period that was covered and the loan is not renewed, PPP loans are no longer deferred and borrowers must make payment to their PPP lender.