The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
“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 with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Stimulus – For those who qualify, First Draw PPP loans can be eligible to be forgiven. This happens when the loan payment is made within an 8– to 24 week period.
- Employee and compensation levels are ensured
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment if the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan proceeds are spent on payroll and other eligible expenses; and
- A minimum of 60% of the profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 months after the last day of the covered period and the loan is not renewed, PPP loans are no longer deferred and borrowers will begin making loan payments to their PPP lender.
Download Student Loan Forgiveness Stimulus
Gallery of Student Loan Forgiveness Stimulus
