The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms in the first draw of PPP loans
Loan Forgiveness Form For Nurses – For those who qualify, First Draw PPP loans can be qualified for loan forgiveness. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are ensured
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of proceeds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week time period after the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.