The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The legislation required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one 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 issued more updated forms.”
Forgiveness terms for the first draw of PPP loans
Navient Student Loan Forgiveness Form – For borrowers who are eligible, First Draw PPP loans are qualified to forgive loans. This is when the loan is disbursed within an 8 to 24 week period.
- The same goes for the compensation and employees.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness if the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan funds are used on payroll expenses as well as other eligible expenses and
- Minimum 60% of proceeds go to payroll costs
- How to request loan forgiveness and the time to apply
After all loan’s proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive payment from their PPP lender.