The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the current stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. The law required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Air Force Loan Forgiveness – For those who qualify First Draw PPP loans are eligible to forgive loans. This applies when the loan is disbursed within an 8 to 24-week period.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- Minimum 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan funds could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- How do I request loan forgiveness and the time to apply
After all loan’s proceeds have been used the borrower is eligible for forgiveness. Borrowers can request forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 years of the end of the time period that was covered the PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.