The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the latest stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued more updated forms.”
First Draw PPP Terms of loan forgiveness
Non For Profit Loan Forgiveness Form – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness during the 8- to 24 week period that follows loan disbursement:
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exactly the same manner.
- The loan funds could be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness , and when to apply
A borrower may apply for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.