The U.S. Small Business Administration has released a 1-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 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. The funds were used to mitigate the economic effects of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. It also included conditions to encourage banks in the community to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one page form for loan forgiveness under the PPP 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 published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Emu Employment Certification Public Service Loan Forgiveness Form – For those who qualify First Draw PPP loans are eligible to be forgiven. This applies if the loan disbursement occurs within an 8– to 24-week period.
- This is also true for pay and benefits for employees.
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is paid within an 8– 24 week period.
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I request loan forgiveness and when
After all loan proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the covered period, then PPP loans are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.