The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the current stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment 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 the updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Non Profit Forgiveness Form – For eligible borrowers First Draw PPP loans can be qualified to forgive loans. This applies when the loan is disbursed within an 8– to 24-week period.
- Pay and worker levels are kept at a constant level.
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is repaid within an 8– 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan funds could be used to pay payroll costs or other expenses that are eligible.
- At least 60% of funds go to expenses for payroll
- How do I request loan forgiveness and when to apply
Once all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers can request forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 months of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.