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 are in line with the current stimulus law.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them cope with the economic fallout of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting 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 from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Disability Form For Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This applies when the loan is disbursed within an 8– to 24-week timeframe.
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan proceeds are used on payroll and other expenses that are eligible and
- At least 60% of proceeds go to the cost of payroll
- What is the best time to apply for loan forgiveness
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers may apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 years of the end of the period covered, then PPP loan payments can no longer deferred and borrowers will begin making loan payments to their PPP lender.