The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the current stimulus legislation.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA release simplified forms within 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness within 24 days of the date of the 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 released updated forms.”
Forgiveness terms for the initial draw of PPP loans
Ssi And Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be suitable for loan forgiveness. This applies when the loan payment is made within an 8– to 24 week period.
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll and other eligible expenses; and
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– to 24 week time frame.
- Pay and worker levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds could be used to cover payroll costs or other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 years of the end of the time period that was covered and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers will begin making payment to their PPP lender.