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 also contains newly updated forms to comply with the current stimulus legislation.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The law required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness within 24 days of the date of enactment 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 released the updated forms.”
Forgiveness terms in the initial draw of PPP loans
N J Public Service Loan Forgiveness Certification Form 2019 – First Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week period after the disbursement of loan:
- The same goes for the pay and benefits for employees.
- The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is paid within an 8– 24-week time frame.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the funds go to payroll costs
- How do I apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the date of expiration of the covered period and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers will begin making payment to their PPP lender.