The U.S. Small Business Administration has issued a one-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 legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 days of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”
First Draw PPP Terms of loan forgiveness
Public Service Loan Forgiveness Form – For those who qualify First Draw PPP loans are qualified for loan forgiveness. This happens when the loan payment is made within an 8 to 24-week period.
- The same goes for the pay and benefits for employees.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week duration following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The proceeds of the loan could be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
- How to apply for loan forgiveness and the time to apply
A borrower can apply for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are able to receive the loan payment from their PPP lender.