The U.S. Small Business Administration has released a 1-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 legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The law required that the SBA issue simplified forms within the first 24 hours of the signing into law. This was to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 days of the date of enactment of 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 released the updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Ohio – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24-week period after the loan’s disbursement
- Pay and worker levels are kept at a constant level.
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible customers are qualified for loan forgiveness if the loan is paid within an 8– 24 week time frame.
- Pay and worker levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- Minimum 60% of funds go to expenses for payroll
- How to request loan forgiveness and when
When all of the loan’s proceeds have been used, a borrower can apply to be forgiven. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan are able to receive loan payments from their PPP lender.