The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. It also included conditions to encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said 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 enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
Forgiveness terms for the first draw of PPP loans
Student Loan Forgiveness For Scientists – 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 period.
- This is also true for pay and benefits for employees.
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness if the loan is paid within an 8to 24-week time frame.
- Pay and worker levels are maintained 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 eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
- How to request loan forgiveness and when to apply
Once all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.