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. It also includes newly revised forms that comply with the current stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The law required that the SBA release 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, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 days 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 issued additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Ameritech Financial Student Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8-to 24 week period that follows the disbursement of loan:
- Pay and worker levels are maintained
- The proceeds from the loan may be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are qualified for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll as well as other eligible expenses and
- A minimum of 60% of the profits are spent on payroll costs
- How do I apply for loan forgiveness and when
When all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can request forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the covered period, then PPP loan payments are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.