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. It also includes newly revised forms to comply with the latest stimulus legislation.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who 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 form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the first draw of PPP loans
Teacher Loan Forgiveness Form 2022 – For eligible borrowers First Draw PPP loans are suitable to be forgiven. This happens when the loan payment is made within an 8– to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified 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 kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan can be used to pay for payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- How and when to apply for loan forgiveness
When all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months of the end of the time period that was covered the PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.