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. The form is also updated with new forms that comply with the latest stimulus law.
The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 hours of the bill being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, especially for minority-owned companies that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued more updated forms.”
Forgiveness terms in the first draw of PPP loans
What Disabilities Qualify For Student Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified for loan forgiveness. This happens when the loan is disbursed within an 8– to 24-week timeframe.
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following loan payment:
- The levels of compensation and employee pay are maintained in the same way in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- A minimum of 60% of the proceeds go to expenses for payroll
- How to apply for loan forgiveness and the time to apply
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.