The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being signed into law to simplify the procedure of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Fax Public Loan Forgiveness Form – First Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8- to 24-week covered period following the loan’s disbursement
- Pay and worker levels are kept at a constant level.
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week covered period following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of the proceeds are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
A borrower may apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the end of the time period that was covered the PPP loan payments can not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.