The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, especially for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one-page form for PPP loan forgiveness within 24 hours of 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 published new forms.”
Forgiveness terms for the initial draw of PPP loans
Www Federalstudentaid Ed Gov Loan Forgiveness – First Draw PPP loans granted 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
- Pay and worker levels are ensured
- The proceeds from the loan may be used to pay expenses for payroll or other eligible expenses.
- At least 60% of the profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week duration following loan payment:
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan could be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the profits are used for the cost of payroll
- How and when to apply for loan forgiveness?
Once all of the loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers may apply for forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan will be able to receive loan payments from their PPP lender.