The U.S. Small Business Administration has released a form of one page 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 most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of 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 provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Forgiveness terms in the initial draw of PPP loans
Is There A Federal Student Loan Forgiveness Program – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24 week period that follows the loan’s disbursement
- The same goes for the pay and benefits for employees.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exactly the same manner.
- The loan proceeds are used on payroll as well as other eligible expenses and
- At least 60% of funds go to payroll costs
- When and how do I apply for loan forgiveness
After all loan proceeds have been used The borrower may apply to be forgiven. 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 end of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers must make monthly payments to their PPP lender.