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. The form also contains newly updated forms to comply with the most recent stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the bill being adopted to make the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation 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 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 Student Loan Forgiveness – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This applies when the loan payment is made within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are maintained
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of proceeds go to payroll costs
- What is the best time to apply for loan forgiveness
After all loan’s proceeds have been used, a borrower can apply to be forgiven. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.