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 to comply with the current stimulus law.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing for small-scale businesses who needed loans. The funds were used to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was adopted to make the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that had trouble getting loans last year.
“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, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued more updated forms.”
Terms for forgiveness for the initial draw of PPP loans
If You Die Are Your Student Loans Forgiven – For those who qualify First Draw PPP loans are eligible for loan forgiveness. 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 expenses and other expenses that are eligible and
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is repaid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- At least 60% of proceeds are spent on payroll costs
- How do I apply for loan forgiveness and when
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loans are no longer deferred and borrowers will begin making monthly payments to their PPP lender.