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. It also includes newly revised forms that are in line with the current stimulus law.
The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours of the bill being adopted to make the application process for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness For Education Employees – For those who qualify, First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24 week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible customers are eligible for loan repayment if the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an exact same way.
- The loan proceeds can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness and when to apply
After all loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can request forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loan payments can no longer deferred, and borrowers must make loan payments to their PPP lender.