The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The law requires that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. It also included conditions that encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for loan forgiveness under the PPP within 24 days of 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 issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Federal Student Loan Forgiveness Eligibility – For eligible borrowers First Draw PPP loans are suitable to forgive loans. This happens if the loan disbursement occurs within an 8– to 24-week timeframe.
- Pay and worker levels 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 are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness if the loan is paid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan funds are used on payroll expenses as well as other eligible expenses and
- At least 60% of the profits are spent on payroll costs
- How do I apply for loan forgiveness and when to apply
A borrower can apply for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any point up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.