The U.S. Small Business Administration has issued a one-page form 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 latest stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Obamacare Student Loan Forgiveness Program – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds could be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the last day of the period covered, then PPP loans are not deferred any longer, and borrowers will begin making payment to their PPP lender.