The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness within 24 days of the date of the 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 more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Graduate Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are qualified to be forgiven. This happens when the loan is disbursed within an 8– to 24 week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan funds could be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds are used for the cost of payroll
- How and when to apply for loan forgiveness
A borrower may apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.