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. The form also contains newly updated forms to comply with the most recent stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus outbreak. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
Forgiveness terms in the first draw of PPP loans
Physician Assistant Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified to be forgiven. This applies when the loan payment is made within an 8– to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8– 24 week time frame.
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been utilized. The borrower can apply for forgiveness at any time until the date of maturity. If the borrower does not apply for forgiveness within 10 months of the end of the time period that was covered, then PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.