The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. The law required that the SBA release simplified forms within 24 hours of the signing into law. This was to make it easier to apply for forgiveness. It also included conditions to encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP 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 more updated forms.”
First Draw PPP Conditions for loan forgiveness
Public Service Loan Forgiveness Acceptance Rate – For eligible borrowers, First Draw PPP loans are eligible to be forgiven. This is if the loan disbursement occurs within an 8– to 24 week period.
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to pay the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible customers are eligible for loan repayment if the loan is paid within an 8– 24-week period.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds can be used to cover payroll costs or other eligible expenses.
- Minimum 60% of profits go towards payroll costs
- How to apply for loan forgiveness and when
After all loan’s proceeds have been used, a borrower can apply for forgiveness. Borrowers can request forgiveness at any time until the loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the last day of the time period that was covered, then PPP loans are no longer deferred, and borrowers must make payment to their PPP lender.
Download Public Service Loan Forgiveness Acceptance Rate
Gallery of Public Service Loan Forgiveness Acceptance Rate
