The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the legislation being adopted to make the process of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who struggled to get 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 PPP form, which is one page long, for loan forgiveness within 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
Terms for forgiveness for the initial draw of PPP loans
Public Service Loan Forgiveness Program Eligibility – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week period after loan disbursement:
- It’s the same for pay and benefits for employees.
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible customers are eligible for loan forgiveness when the loan is repaid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exactly the same manner.
- The loan proceeds are spent on payroll and other eligible expenses; and
- At least 60% of profits go towards the cost of payroll
- When and how do I apply for loan forgiveness?
After all loan funds have been utilized The borrower may apply to be granted forgiveness. The borrower can request forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.