The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 hours of the date of the 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 issued new forms.”
First Draw PPP Terms of loan forgiveness
Ppp Loan Forgiveness Guidelines – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following loan disbursement:
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is repaid within an 8to 24 week time frame.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits go towards expenses for payroll
- How do I request loan forgiveness and when
When all of the loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.