The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 hours of the legislation being 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 that 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 hours of the date of the 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 released the updated forms.”
First Draw PPP Loan forgiveness terms
National Guard Student Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week covered period following the disbursement of loan:
- Pay and worker levels are maintained
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is paid within an 8to 24 week time frame.
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- A minimum of 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
After all loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers may apply for forgiveness at any point up to the date of maturity. Borrowers who don’t request forgiveness within 10 months of the end date of the loan will be able to receive loan payments from their PPP lender.