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. It also includes newly revised forms that comply with the current stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released new forms that were updated.”
Forgiveness terms for the first draw of PPP loans
Ppp Loan Forgiveness For Self-employed – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds from the loan may be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan funds could be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
When all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.