The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus law.
The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, especially for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Loopholes – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24-week period after loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan funds can be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the profits are used to pay for payroll expenses
- How to apply for loan forgiveness and the time to apply
After all loan proceeds have been used The borrower may apply to be forgiven. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If they do not file for forgiveness within 10 years of the date of expiration of the covered period the PPP loan payments are no longer deferred and borrowers must make payment to their PPP lender.