The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the most recent stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment 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 released updated forms.”
Forgiveness terms for the initial draw of PPP loans
Sallie Mae Loan Forgiveness For Teachers Form – For those who qualify First Draw PPP loans are suitable for loan forgiveness. This happens if the loan disbursement occurs within an 8– to 24 week period.
- This is also true for employee compensation and the.
- The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
- At least 60% of profits go towards payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is repaid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan proceeds are spent on payroll as well as other eligible expenses and
- Minimum 60% of profits go towards the cost of payroll
- How and when to apply for loan forgiveness?
A borrower may apply for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are able to receive the loan payment from their PPP lender.