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 to comply with the most recent stimulus law.
The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. It also included conditions that would encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Conditions for loan forgiveness
Will Private Student Loans Be Forgiven – For those who qualify First Draw PPP loans can be eligible to forgive loans. This is if the loan disbursement occurs within an 8– to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week covered period following loan disbursement:
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan funds can be used to cover expenses for payroll or other expenses that are eligible.
- Minimum 60% of proceeds go to the cost of payroll
- When and how do I apply for loan forgiveness
The borrower is eligible for forgiveness after all loan proceeds for which the borrower wants forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan will be able to receive payment from their PPP lender.