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 latest stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Loan forgiveness terms
Federal Student Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24-week covered period following loan disbursement:
- Pay and worker levels are kept at a constant level.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- At least 60% of proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive the loan payment from their PPP lender.