The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout from the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 days of the bill being adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Loan forgiveness terms
What’s The Status Of Student Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24-week covered period following loan disbursement:
- The same goes for the pay and benefits for employees.
- The loan proceeds 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 given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week covered period following loan payment:
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds could be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of funds go to expenses for payroll
- How to apply for loan forgiveness and the time to apply
When all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any point up to the date of maturity. If they do not file for forgiveness within 10 months after the date of expiration of the covered period, then PPP loan payments are no longer deferred, and borrowers must make monthly payments to their PPP lender.