The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the most recent stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. It also included conditions that would encourage community banks to lend more, especially to minority-owned businesses that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 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 published more updated forms.”
Forgiveness terms for the initial draw of PPP loans
Single Mom Student Loan Forgiveness – For those who qualify First Draw PPP loans are eligible to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- The levels of compensation and employee pay are maintained
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- A minimum of 60% of the profits go towards expenses for payroll
- How do I apply for loan forgiveness , and when
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can request forgiveness anytime up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the time period that was covered, then PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.