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 are in line with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month, which provided $284 billion of funding to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days of the legislation being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, particularly for minority-owned companies that 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 within 24 days of the date of enactment of 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 published new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Teacher Loan Forgiveness Forms 2022 – First Draw PPP loans made to eligible borrowers qualify for total loan forgiveness within the 8-to 24 week period that follows the loan’s disbursement
- It’s the same for compensation and employees.
- The loan funds are used on payroll expenses 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 Loan Forgiveness Conditions
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness?
After all loan proceeds have been used The borrower may apply for forgiveness. The borrower can apply for forgiveness at any time until the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the covered period and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers must make payment to their PPP lender.