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 that comply with the current stimulus law.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the application process for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, specifically for 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 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 issued additional updated forms.”
Forgiveness terms for the first draw of PPP loans
Teacher Loan Forgiveness Fillable Pdf Form – For borrowers who are eligible First Draw PPP loans can be suitable to forgive loans. This applies when the loan payment is made within an 8 to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid within an 8– to 24 week time frame.
- Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of profits go towards expenses for payroll
- How and when to apply for loan forgiveness?
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and the borrower will be required to make monthly payments to their PPP lender.