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 to comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The law required that the SBA release simplified forms within 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting 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 PPP form loan forgiveness within 24 days of the date of the enactment of 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 For Farmers – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24 week period that follows loan disbursement:
- The levels of compensation and employee pay are maintained
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following loan disbursement:
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds could be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the profits are used to pay for payroll expenses
- How do I apply for loan forgiveness and when
After all loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the covered period, then PPP loan payments are no longer deferred and borrowers will begin making monthly payments to their PPP lender.