The U.S. Small Business Administration has released a form of one page 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 legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions that encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published the updated forms.”
Forgiveness terms in the initial draw of PPP loans
Private Loan Debt Forgiveness – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This happens when the loan payment is made within an 8 to 24 week period.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8– to 24-week duration following loan disbursement:
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of profits are used for the cost of payroll
- How to apply for loan forgiveness and when
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can request forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive payment from their PPP lender.
Download Private Loan Debt Forgiveness
Gallery of Private Loan Debt Forgiveness
