The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the most recent stimulus law.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness by 24 days after the date of the enactment of 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 issued more updated forms.”
First Draw PPP Loan forgiveness terms
Who Would Pay For Student Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan payment is made within an 8 to 24-week period.
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week duration following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan funds are used on payroll costs as well as other eligible expenses and
- At least 60% of proceeds go to payroll costs
- When and how do I apply for loan forgiveness?
When all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan will be able to receive payment from their PPP lender.