The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the current stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 hours of the legislation being adopted to make the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned businesses that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours of 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 updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Public Student Loan Forgiveness Pslf Employment Certifation Form – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24 week period that follows loan disbursement:
- The same goes for the pay and benefits for employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is paid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
- A minimum of 60% of the profits are spent on payroll costs
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.