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 to comply with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 days of the date of the 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 published updated forms.”
First Draw PPP Terms of loan forgiveness
Employer Public Loan Forgiveness Form Medical Leave – First Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week period after the loan’s disbursement
- This is also true for pay and benefits for employees.
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is paid within an 8– to 24 week time frame.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan funds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of profits go towards payroll costs
- How do I apply for loan forgiveness and when
When all of the loan funds have been utilized The borrower may apply for forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request 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.