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 that are in line with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus epidemic. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. It also included conditions to encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”
First Draw PPP Loan forgiveness terms
Aes Student Loan Forgiveness Form – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if 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 and other eligible expenses; and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week covered period following loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan proceeds are spent on payroll as well as other eligible expenses and
- A minimum of 60% of proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness and when
When all of the loan’s proceeds have been used The borrower may apply to be forgiven. The borrower can apply for forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are eligible to receive loan payments from their PPP lender.