The U.S. Small Business Administration has issued a one-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 relief plan that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to facilitate the application for forgiveness. The legislation also contained 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 one-page PPP form loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued additional updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Student Loan Forgiveness Faq – For those who qualify, First Draw PPP loans are suitable for loan forgiveness. This applies when the loan payment is made within an 8– to 24 week period.
- Pay and worker levels are maintained
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- At least 60% of funds go to expenses for payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness once all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can request forgiveness at any time up to the date of maturity. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.