The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the current stimulus legislation.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 days after the legislation was signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Teacher Loan Forgiveness Form 2022 – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week period after loan disbursement:
- The levels of compensation and employee pay are maintained
- The loan proceeds can be used to cover payroll costs or other eligible expenses.
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week duration following the loan’s disbursement
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exact same way.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of profits are used to pay for payroll expenses
- How to apply for loan forgiveness , and when to apply
When all of the loan proceeds have been used The borrower may apply to be granted forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months after the last day of the time period that was covered the PPP loan payments can not deferred any longer, and the borrower will be required to make payment to their PPP lender.