The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that provided $284 billion of funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was adopted to make the application process for forgiveness, along with conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses who struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Conditions for loan forgiveness
Missouri College Loan Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24-week covered period following loan disbursement:
- Employee and compensation levels are ensured
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8to 24 week period.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll and other eligible expenses; and
- At least 60% of the profits are spent on payroll costs
- How to apply for loan forgiveness , and when to apply
Once all of the loan proceeds have been used the borrower is eligible to be forgiven. The borrower can apply for forgiveness at any time until the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the end date of the loan will be able to receive loan payments from their PPP lender.