The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the current stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned companies that had trouble getting 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 from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
Forgiveness terms for the initial draw of PPP loans
PPP Loan Forgiveness Application Blue Acorn – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8-to 24-week covered period following the disbursement of loan:
- It’s the same for employee compensation and the.
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of proceeds go to expenses for payroll
- How do I request loan forgiveness and the time to apply
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.