The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that would encourage community banks to lend more specifically to minority-owned companies that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
First Draw PPP Terms of loan forgiveness
Loan Forgiveness For Healthcare Workers – For those who qualify First Draw PPP loans can be eligible to forgive loans. This is when the loan is disbursed within an 8 to 24 week period.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the profits go towards expenses for payroll
- How and when to apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been used. The borrower can request forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.