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 also contains newly updated forms that are in line with the most recent stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The law required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness by 24 days after 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.”
First Draw PPP Loan forgiveness terms
Instructions For Public Loan Forgiveness Employment Certification Form – For those who qualify First Draw PPP loans are eligible for loan forgiveness. This applies when the loan is disbursed within an 8– to 24-week period.
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The proceeds of the loan could be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of proceeds go to payroll costs
- When and how do I apply for loan forgiveness?
Once all of the loan funds have been utilized The borrower may apply for forgiveness. Borrowers can request forgiveness at any time up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are eligible to receive loan payments from their PPP lender.