The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the bill being adopted to make the procedure of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Loan forgiveness terms
Public Service Loan Forgiveness Form Instructions – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This is if the loan disbursement occurs within an 8– to 24-week timeframe.
- Pay and worker levels are maintained
- The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan funds are used on payroll expenses and other eligible expenses; and
- At least 60% of funds go to payroll costs
- How and when to apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date of maturity. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive payment from their PPP lender.