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 that are in line with the current stimulus legislation.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, especially for minority-owned companies that had trouble 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 enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Terms of loan forgiveness
Sba Disaster Loan Forgiveness Program – For borrowers who are eligible First Draw PPP loans can be qualified to forgive loans. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan funds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been used. Borrowers can apply for forgiveness any time 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 loan payments from their PPP lender.