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 current stimulus law.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness by 24 days after 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 published new forms.”
First Draw PPP Conditions for loan forgiveness
How To Fill Out Public Service Loan Forgiveness Form – For those who qualify First Draw PPP loans are suitable for loan forgiveness. This applies when the loan payment is made within an 8– to 24 week period.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness if the loan is paid within an 8to 24 week period.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan funds are used on payroll as well as other eligible expenses and
- At least 60% of proceeds are used to pay for payroll expenses
- How to request loan forgiveness and when
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred and borrowers must make monthly payments to their PPP lender.