The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within the first 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued additional updated forms.”
Terms for forgiveness for the first draw of PPP loans
Sba Loan Forgiveness – For those who qualify First Draw PPP loans can be suitable for loan forgiveness. This happens if the loan disbursement occurs within an 8 to 24 week period.
- The same goes for the pay and benefits for employees.
- The loan proceeds are spent on payroll and other eligible expenses; and
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness if the loan is paid within an 8to 24 week period.
- Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll as well as other eligible expenses and
- A minimum of 60% of the profits are spent on payroll costs
- How to request loan forgiveness and when
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the covered period the PPP loan payments can no longer deferred, and the borrower will be required to make payment to their PPP lender.
Download Sba Loan Forgiveness
Gallery of Sba Loan Forgiveness
