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. The form also contains newly updated forms to comply with the current stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued additional updated forms.”
First Draw PPP Loan forgiveness terms
Public Servant Loan Forgiveness For Student Loans – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This happens when the loan is disbursed within an 8– to 24 week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are eligible to receive loan payments from their PPP lender.