The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the bill being adopted to make the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Conditions for loan forgiveness
Ppp Loan Forgiveness Application Form 3508s – For eligible borrowers, First Draw PPP loans are suitable to forgive loans. This happens when the loan payment is made within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are maintained
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible customers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week period.
- The levels of compensation and employee pay are maintained in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll as well as other eligible expenses 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 proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can request forgiveness at any time prior to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the period covered the PPP loan payments are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.