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 most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days of the bill being adopted to make the application process for forgiveness. The legislation also contained conditions meant to encourage more loans from community banks, particularly for minority-owned companies that struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
Forgiveness terms for the first draw of PPP loans
What Nonprofits Qualify For Student Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24-week covered period following the loan’s disbursement
- The levels of compensation and employee pay are maintained
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of funds go to the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is repaid within an 8– 24 week time frame.
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
After all loan’s proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive payment from their PPP lender.