The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus law.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness by 24 days after the date of enactment 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 released new forms that were updated.”
Forgiveness terms in the initial draw of PPP loans
Former Cctc Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans can be eligible to be forgiven. This is when the loan is disbursed within an 8– to 24-week period.
- The levels of compensation and employee pay are ensured
- The loan proceeds can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exact same way.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. Borrowers who do not 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.