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 to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the bill being adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
Forgiveness terms for the first draw of PPP loans
Perkins Loan Forgiveness For Physical Therapist – For those who qualify First Draw PPP loans can be eligible to forgive loans. This applies when the loan is disbursed within an 8– to 24 week period.
- The levels of compensation and employee pay are ensured
- The proceeds from the loan may be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week duration following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to payroll costs
- When and how do I apply for loan forgiveness?
Once all of the loan’s proceeds have been used the borrower is eligible for forgiveness. Borrowers can 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 time period that was covered, then PPP loan payments are no longer deferred, and borrowers will begin making payment to their PPP lender.