The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the current stimulus law.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans by 24 days after the date of the 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 published new forms.”
Forgiveness terms for the initial draw of PPP loans
Florida Department Of Education Nursing Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified to be forgiven. This happens when the loan payment is made within an 8– to 24 week period.
- This is also true for compensation and employees.
- The proceeds from the loan may be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds could be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are spent on payroll costs
- How do I apply for loan forgiveness and when to apply
Once all of the loan’s proceeds have been used, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.