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. It also includes newly revised forms that are in line with the current stimulus law.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days of the bill being signed into law to simplify the procedure of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 days of 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 additional updated forms.”
Forgiveness terms in the first draw of PPP loans
Student Loan Forgiveness Scam Voicemail – For borrowers who are eligible, First Draw PPP loans can be suitable for loan forgiveness. This applies when the loan payment is made within an 8– to 24-week period.
- Employee and compensation levels are maintained
- The loan proceeds can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of proceeds go to payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds are spent on payroll as well as other eligible expenses and
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness and when
When all of the loan proceeds have been used, a borrower can apply to be forgiven. The borrower can request forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the period covered and the loan is not renewed, PPP loan payments can not deferred any longer, and borrowers must make monthly payments to their PPP lender.