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 are in line with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, especially for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 hours of the date of 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 the updated forms.”
Forgiveness terms for the first draw of PPP loans
Do Private Student Loans Qualify For Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24 week period that follows loan disbursement:
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to pay for payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is paid within an 8to 24-week period.
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the proceeds are used for the cost of payroll
- How to apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any time until the date at which the loan matures. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.
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