The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the current stimulus law.
The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help 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 legislation being adopted to make the process of applying for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days 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 issued updated forms.”
Forgiveness terms for the first draw of PPP loans
Teacher Loan Forgiveness Virginia – For borrowers who are eligible, First Draw PPP loans can be qualified to be forgiven. This happens when the loan payment is made within an 8– to 24 week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week time period after the loan’s disbursement
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds could be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to the cost of payroll
- How to apply for loan forgiveness and when
After all loan’s proceeds have been used The borrower may apply to be forgiven. The borrower can request forgiveness any time up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the end of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make payment to their PPP lender.