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 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 that needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Parent Plus Loan Forgiveness Disability – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This is if the loan disbursement occurs within an 8– to 24-week timeframe.
- The levels of compensation and employee pay are maintained
- The loan proceeds can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week covered period following loan disbursement:
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll as well as other eligible expenses and
- At least 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.