The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours 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.”
Forgiveness terms for the first draw of PPP loans
Bernie Sanders Student Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24 week period that follows loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week time period after loan payment:
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds could be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds are spent on payroll costs
- When and how do I apply for loan forgiveness
When all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan will be able to receive the loan payment from their PPP lender.