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. It also includes newly revised forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the bill being adopted to make the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released additional updated forms.”
Forgiveness terms in the first draw of PPP loans
Ford Loan Forgiveness Program – For those who qualify First Draw PPP loans are eligible to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week timeframe.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment 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 exact same way.
- The loan proceeds could be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are spent on payroll costs
- How and when to apply for loan forgiveness
After all loan proceeds have been used, a borrower can apply for forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the last day of the time period that was covered, then PPP loans are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.