The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that would encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans by 24 days after 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 published the updated forms.”
Forgiveness terms for the first draw of PPP loans
Siue Student Loan Forgiveness – For those who qualify, First Draw PPP loans can be suitable to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the funds go to expenses for payroll
- When and how do I apply for loan forgiveness?
Once all of the loan’s proceeds have been used, a borrower can apply for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the end date of the loan will be able to receive payment from their PPP lender.