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 comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the legislation being adopted to make the application process for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Arizona Student Loan Forgiveness For Teachers – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week period after the loan’s disbursement
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified customers are eligible for loan repayment when the loan is paid within an 8– 24 week time frame.
- Pay and worker levels are maintained in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll as well as other eligible expenses and
- At least 60% of the proceeds are used to pay for payroll expenses
- How to request loan forgiveness and when
When all of the loan funds have been utilized The borrower may apply to be forgiven. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are able to receive loan payments from their PPP lender.