The U.S. Small Business Administration has issued a one-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 law.
Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law required that the SBA issue simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. It also included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain 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 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
Forgiveness terms in the first draw of PPP loans
Public Service Loan Forgiveness Form Fax Number Does.not Work – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8-to 24 week period that follows the loan’s disbursement
- Pay and worker levels are ensured
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan funds can be used to pay for payroll costs or other eligible expenses.
- At least 60% of profits go towards the cost of payroll
- How do I apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness only after all loan proceeds for 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 months of the expiration date of the loan will be able to receive payment from their PPP lender.