The U.S. Small Business Administration has issued a one-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 most recent stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the bill being signed into law to simplify the application process for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, particularly for minority-owned companies that were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness 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 published updated forms.”
Forgiveness terms in the initial draw of PPP loans
Ppp Loan Forgiveness Consulting – For borrowers who are eligible, First Draw PPP loans can be eligible for loan forgiveness. This happens when the loan payment is made within an 8– to 24-week period.
- Employee and compensation levels are maintained
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week time period after 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 used on payroll costs and other eligible expenses; and
- A minimum of 60% of the funds go to payroll costs
- How do I apply for loan forgiveness , and the time to apply
When all of the loan funds have been utilized The borrower may apply to be granted forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. If borrowers do not apply for forgiveness within 10 years of the end of the period covered the PPP loans are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.