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. It also includes newly revised forms to comply with the most recent stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions to encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 days from 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 the updated forms.”
Forgiveness terms in the first draw of PPP loans
Public Service Jobs That Qualify For Student Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans can be qualified to forgive loans. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan funds are used on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 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 forgiveness if the loan is paid within an 8– to 24 week time frame.
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The loan proceeds could be used to cover the cost of payroll as well as other eligible expenses.
- A minimum of 60% of the profits go towards payroll costs
- How to apply for loan forgiveness and the time to apply
After all loan proceeds have been used the borrower is eligible to be forgiven. Borrowers can request forgiveness at any time until the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loan payments can no longer deferred, and the borrower will be required to make loan payments to their PPP lender.