The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 days of the bill being adopted to make the procedure of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 hours of 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 released updated forms.”
First Draw PPP Terms of loan forgiveness
What Student Loans Are Being Forgiven – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows loan disbursement:
- This is also true for pay and benefits for employees.
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness if the loan is paid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds are spent on payroll costs as well as other eligible expenses and
- At least 60% of funds go to payroll costs
- How to apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the end of the period covered the PPP loans are not deferred any longer, and borrowers must make monthly payments to their PPP lender.