The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness by 24 days after 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 released updated forms.”
Forgiveness terms in the initial draw of PPP loans
Public Sector Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be eligible to forgive loans. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- The same goes for the employee compensation and the.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8– to 24-week period.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
- How and when to apply for loan forgiveness
After all loan funds have been utilized The borrower may apply to be forgiven. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers must make monthly payments to their PPP lender.