The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Get College Loans Forgiven – For those who qualify First Draw PPP loans can be eligible to forgive loans. This happens when the loan is disbursed within an 8– to 24-week timeframe.
- It’s the same for compensation and employees.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is repaid within an 8– 24-week period.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan can be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness , and when
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any point up to the date of maturity. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.