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 is also updated with new forms that comply with the latest stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned companies that had trouble getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment in 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.”
First Draw PPP Loan forgiveness terms
PPP Loan Forgiveness Long Form – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This is when the loan payment is made within an 8 to 24-week timeframe.
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of the funds go to payroll costs
- When and how do I apply for loan forgiveness?
Once all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can apply for forgiveness at any time until the loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the last day of the period covered the PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.