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. The form is also updated with new forms to comply with the most recent stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. The law required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Student Loan Forgiveness Contact – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This happens when the loan payment is made within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers are eligible for loan repayment when the loan is paid within an 8– 24-week time frame.
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- At least 60% of profits are used for the cost of payroll
- How to apply for loan forgiveness , and when
A borrower may apply for forgiveness after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the time period that was covered the PPP loan payments are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.