The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 days of the legislation being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Loan forgiveness terms
2022 New Student Loan Forgiveness Program – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24-week covered period following the loan’s disbursement
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness when the loan is paid within an 8– to 24-week period.
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll expenses as well as other eligible expenses and
- Minimum 60% of profits go towards 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 are able to apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.