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 comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days after the legislation was approved by the lawmaker to streamline the application process for forgiveness, along with conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans last year.
“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness by 24 days after 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 more updated forms.”
Forgiveness terms in the first draw of PPP loans
Title Loan Forgiveness Program – For borrowers who are eligible, First Draw PPP loans can be eligible to forgive loans. This happens when the loan payment is made within an 8– to 24-week period.
- It’s the same for employee compensation and the.
- The loan proceeds are used on payroll and other expenses that are eligible and
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8– to 24 week period.
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The loan proceeds can be used to pay for payroll costs or other expenses that are eligible.
- Minimum 60% of profits go towards the cost of payroll
- When and how do I apply for loan forgiveness?
Once all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the covered period the PPP loan payments are no longer deferred, and borrowers must make monthly payments to their PPP lender.