The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in 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 provide simplified forms within 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Student Loan Forgiveness For Nonprofit Employees – For eligible borrowers First Draw PPP loans are eligible to be forgiven. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- It’s the same for employee compensation and the.
- The proceeds from the loan may be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8to 24 week period.
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll as well as other eligible expenses and
- A minimum of 60% of the proceeds go to the cost of payroll
- How do I apply for loan forgiveness , and when
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do 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 can not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.