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 to comply with the current stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with 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 Conditions for loan forgiveness
Teacher Loan Forgiveness Indiana – For eligible borrowers First Draw PPP loans are qualified to be forgiven. This applies when the loan payment is made within an 8 to 24-week period.
- Pay and worker levels are ensured
- 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 spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given 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 payment:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exact same way.
- The proceeds of the loan can be used to pay expenses for payroll or other eligible expenses.
- At least 60% of the proceeds are used for the cost of payroll
- When and how do I apply for loan forgiveness?
When all of the loan’s proceeds have been used, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 months after the date of expiration of the covered period, then PPP loan payments are no longer deferred and borrowers must make monthly payments to their PPP lender.