The U.S. Small Business Administration has issued a one-page form 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 most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout from the coronavirus pandemic. The law requires that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 days of 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 issued updated forms.”
Forgiveness terms for the initial draw of PPP loans
Former Davenport University Students Loan Forgiveness Program – For borrowers who are eligible First Draw PPP loans are qualified to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the proceeds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week duration following loan disbursement:
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness and the time to apply
A borrower can apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time up to the date of maturity. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive payment from their PPP lender.