The U.S. Small Business Administration has released a 1-page form 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 current stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the application process for forgiveness. It also included conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness within 24 days of the date of 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 released new forms.”
First Draw PPP Terms of loan forgiveness
Hbcu Student Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so during the 8- to 24-week period after the loan’s disbursement
- It’s the same for pay and benefits for employees.
- The loan proceeds are spent on payroll 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 Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week time period after loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the proceeds go to payroll costs
- How and when to apply for loan forgiveness
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the covered period the PPP loan payments are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.