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. The form also contains newly updated forms that are in line with the latest stimulus law.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 days of the bill being signed into law to simplify the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, particularly for minority-owned businesses that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
First Draw PPP Loan forgiveness terms
Disability Loan Forgiveness Form – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This happens when the loan payment is made within an 8 to 24-week period.
- It’s the same for pay and benefits for employees.
- The loan proceeds can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- Minimum 60% of funds go to payroll costs
- How to request loan forgiveness and when to apply
When all of the loan proceeds have been used, a borrower can apply to be forgiven. The borrower can request forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the end of the period covered and the loan is not renewed, PPP loans are no longer deferred and the borrower will be required to make loan payments to their PPP lender.