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 that comply with the most recent stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The legislation required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published additional updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Reddit Student Loan Forgiveness – For those who qualify, First Draw PPP loans can be qualified to forgive loans. This is if the loan disbursement occurs within an 8– to 24-week timeframe.
- It’s the same for employee compensation and the.
- The loan funds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness if the loan is paid within an 8– to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll and other eligible expenses; and
- A minimum of 60% of the funds go to expenses for payroll
- How do I request loan forgiveness and when
Once all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers may apply for forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 years of the last day of the period covered and the loan is not renewed, PPP loans are no longer deferred and borrowers must make payment to their PPP lender.