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 current stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 days of the date of 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 issued new forms.”
Terms for forgiveness for the initial draw of PPP loans
Rn Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8 to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are maintained
- The proceeds from the loan may be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8to 24-week period.
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any time until the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the last day of the time period that was covered, then PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.
Download Rn Loan Forgiveness
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