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 also contains newly updated forms that are in line with the most recent stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. The legislation required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP 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 published new forms that were updated.”
Forgiveness terms in the first draw of PPP loans
Nelnet Teacher Loan Forgiveness Application – For those who qualify First Draw PPP loans are qualified to be forgiven. 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 are spent on payroll costs and other eligible expenses; and
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– 24 week time frame.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are used on payroll and other expenses that are eligible and
- Minimum 60% of proceeds go to expenses for payroll
- How and when to apply for loan forgiveness?
When all of the loan funds have been utilized The borrower may apply for forgiveness. The borrower can apply for forgiveness at any time up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are eligible to receive the loan payment from their PPP lender.