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. The form also contains newly updated forms that are in line with the current stimulus law.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the legislation being signed into law to simplify the process of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned businesses that struggled to get loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Loan forgiveness terms
Are My Student Loans Forgiven – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24 week period that follows the loan’s disbursement
- The same goes for the compensation and employees.
- The loan proceeds are used on payroll and other expenses that are eligible and
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is paid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of the proceeds are used to pay for payroll expenses
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any time 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 able to receive payment from their PPP lender.
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