The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within 24 days of the legislation being signed into law to simplify the application process for forgiveness, along with conditions meant to encourage more loans from community banks, particularly for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days of 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 updated forms.”
First Draw PPP Loan forgiveness terms
10 Year Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24-week covered period following the disbursement of loan:
- The same goes for the pay and benefits for employees.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week duration 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 loan proceeds are used on payroll expenses as well as other eligible expenses and
- A minimum of 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.