The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for 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 adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned companies that had trouble getting loans last year.
“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Loan forgiveness terms
State Of Texas Student Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness within the 8-to 24 week period that follows the loan’s disbursement
- Employee and compensation levels are maintained
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible customers are qualified for loan forgiveness if the loan is paid within an 8– 24 week time frame.
- Pay and worker levels are maintained in the same way as is required for the First Draw PPP loan
- The loan funds can be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of proceeds are used for the cost of payroll
- How and when to apply for loan forgiveness?
Once all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the period covered and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.