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. The form also contains newly updated forms to comply with the most recent stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The legislation required 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 encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days 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 published updated forms.”
Forgiveness terms in the first draw of PPP loans
Student Loan Forgiveness For Profit Schools – For borrowers who are eligible, First Draw PPP loans can be eligible to be forgiven. This is when the loan payment is made within an 8 to 24-week period.
- This is also true for pay and benefits for employees.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness if the loan is paid within an 8– to 24-week time frame.
- The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
- How to apply for loan forgiveness and when to apply
Once all of the loan proceeds have been used the borrower is eligible to be forgiven. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the period covered and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.