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 is also updated with new forms that comply with the current stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Loan forgiveness terms
Federal Student Loan Forgiveness Application Form – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24 week period that follows the disbursement of loan:
- The levels of compensation and employee pay are kept at a constant level.
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits are spent on payroll costs
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are able to receive loan payments from their PPP lender.