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. The form also contains newly updated forms to comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. It also included conditions to encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP 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 published additional updated forms.”
First Draw PPP Terms of loan forgiveness
Ppp Loan Forgiveness For Sole Proprietor – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24-week period after the loan’s disbursement
- Pay and worker levels are ensured
- The proceeds from the loan may be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan repayment if the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- Minimum 60% of 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 is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the time period that was covered the PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.