The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout 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 procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans by 24 days after the date of enactment 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 the updated forms.”
First Draw PPP Conditions for loan forgiveness
Federal Loan Forgiveness For Teachers – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week covered period following the disbursement of loan:
- It’s the same for pay and benefits for employees.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The proceeds of the loan could be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.