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. It also includes newly revised forms that comply with the latest stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. 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 procedure of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses that had trouble getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans within 24 hours 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 issued new forms that were updated.”
Forgiveness terms in the initial draw of PPP loans
Sba Disaster Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8-to 24 week period that follows the disbursement of loan:
- The same goes for the compensation and employees.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of profits are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24-week time frame.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness?
A borrower may apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t 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.
Download Sba Disaster Loan Forgiveness
Gallery of Sba Disaster Loan Forgiveness
