The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the first draw of PPP loans
Public Aervice Loan Forgiveness Form – For borrowers who are eligible First Draw PPP loans can be suitable to forgive loans. This is if the loan disbursement occurs within an 8 to 24 week period.
- The same goes for the pay and benefits for employees.
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week time period after loan payment:
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- At least 60% of proceeds go to payroll costs
- How do I apply for loan forgiveness , and the time to apply
Once all of the loan’s proceeds have been used, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If they do not file for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.