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. The form also contains newly updated forms that comply with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March and included $284 billion of financing for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within 24 hours of the signing into law. This is to make it easier to apply for forgiveness. It also included conditions that would encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans by 24 days after the date of 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 released updated forms.”
First Draw PPP Loan forgiveness terms
Tax Forms Forgiven Loan 2016 Navient – For those who qualify First Draw PPP loans are qualified to be forgiven. This happens if the loan disbursement occurs within an 8 to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan proceeds can be used to cover expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exactly the same manner.
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- Minimum 60% of profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness?
Once all of the loan’s proceeds have been used, a borrower can apply to be forgiven. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the end of the period covered the PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.