The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Terms of loan forgiveness
Art Institute Of Portland Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan payment is made within an 8– to 24-week timeframe.
- It’s the same for pay and benefits for employees.
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers are qualified for loan forgiveness when the loan is paid within an 8to 24 week time frame.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds can be used to pay for payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to the cost of payroll
- How to apply for loan forgiveness and when to apply
When all of the loan funds have been utilized The borrower may apply to be forgiven. Borrowers can request forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loan payments can no longer deferred, and borrowers will begin making payment to their PPP lender.