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 are in line with the latest stimulus law.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue 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 who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
Forgiveness terms for the initial draw of PPP loans
How To Apply For Student Loan Forgiveness Due To Disability – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24-week period after loan disbursement:
- The same goes for the employee compensation and the.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week duration following loan disbursement:
- Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
- The loan funds can be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- How do I apply for loan forgiveness , and when
A borrower may apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the period covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers will begin making payment to their PPP lender.