The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the current stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The legislation required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from 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 that were updated.”
First Draw PPP Terms of loan forgiveness
PPP Loan Forgiveness Application Online – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness within the 8-to 24 week period that follows the loan’s disbursement
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8– 24 week period.
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of proceeds go to the cost of payroll
- How and when to apply for loan forgiveness
Once all of the loan funds have been utilized The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 years of the end of the covered period the PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.