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 law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to make more loans, 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 within 24 days of the date of enactment of 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 updated forms.”
First Draw PPP Conditions for loan forgiveness
Federal Family Education Loan Program Ffelp Loans Forgiveness – For those who qualify First Draw PPP loans can be qualified to be forgiven. This happens if the loan disbursement occurs within an 8– to 24 week period.
- Pay and worker levels are ensured
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24-week time period after loan disbursement:
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds could be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
Once all of the loan proceeds have been used the borrower is eligible for forgiveness. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the period covered the PPP loans are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.