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. It also includes newly revised forms to comply with the latest stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The law required that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness by 24 days after the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”
Terms for forgiveness for the initial draw of PPP loans
Do Student Loans Get Forgiven After 25 Years – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week period after the loan’s disbursement
- This is also true for compensation and employees.
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8to 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The proceeds of the loan could be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness and the time to apply
When all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are able to receive the loan payment from their PPP lender.