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 comply with the current stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The law requires that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. It also included conditions that 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 stated that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP 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 published more updated forms.”
First Draw PPP Conditions for loan forgiveness
Student Loan Forgiveness Frauds – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24-week period after loan disbursement:
- It’s the same for compensation and employees.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24 week covered period following the loan’s disbursement
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- A minimum of 60% of the funds go to the cost of payroll
- How to apply for loan forgiveness and when
A borrower may apply for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loan payments are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.