The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus law.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses that needed loans. The funds were used to mitigate the economic effects of the coronavirus epidemic. The law required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to make more loans particularly to minority-owned businesses that had difficulty 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 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
Terms for forgiveness for the first draw of PPP loans
Peace Corps Student Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24 week period that follows the loan’s disbursement
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of the profits are spent on payroll costs
- How do I apply for loan forgiveness and the time to apply
After all loan’s proceeds have been used the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If they do not file for forgiveness within 10 years of the date of expiration of the covered period the PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.