The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. It also included conditions that encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms for the first draw of PPP loans
Does The Military Forgive Student Loans – For borrowers who are eligible First Draw PPP loans can be suitable to be forgiven. This is if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for compensation and employees.
- The loan funds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is paid within an 8– to 24-week period.
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds could be used to pay the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of profits go towards payroll costs
- When and how do I apply for loan forgiveness
Once all of the loan’s proceeds have been used, a borrower can apply for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.