The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the latest stimulus legislation.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs 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 under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
Forgiveness terms for the first draw of PPP loans
Military Car Loan Forgiveness – For eligible borrowers First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan payment is made within an 8– to 24-week timeframe.
- The levels of compensation and employee pay are maintained
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds are used on payroll costs and other eligible expenses; and
- At least 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
A borrower can apply for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive the loan payment from their PPP lender.