The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the most recent stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. It also included conditions to encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Conditions for loan forgiveness
Teacher Loan Forgiveness Forbearance Request Form – For borrowers who are eligible First Draw PPP loans are suitable to forgive loans. This is when the loan payment is made within an 8 to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week covered period following loan disbursement:
- Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll and other expenses that are eligible and
- At least 60% of proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness?
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time until the date of maturity. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the covered period the PPP loan payments are no longer deferred, and borrowers will begin making payment to their PPP lender.