The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the most recent stimulus law.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-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 with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Loan forgiveness terms
Loan Forgiveness For Social Workers – For borrowers who are eligible, First Draw PPP loans are suitable to forgive loans. This is when the loan payment is made within an 8– to 24 week period.
- The same goes for the pay and benefits for employees.
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week duration following loan disbursement:
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.