The U.S. Small Business Administration has issued a one-page form that simplifies the application 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 relief plan that Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans last year.
“The Small Business Administration met the requirement of releasing the one page form for the forgiveness of PPP loans within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”
Forgiveness terms for the initial draw of PPP loans
Usda Farm Loan Forgiveness 2022 – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24-week period after loan disbursement:
- Employee and compensation levels are ensured
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness if the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan funds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of funds go to the cost of payroll
- How and when to apply for loan forgiveness
Once all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can request forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are able to receive loan payments from their PPP lender.
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