The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours 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 updated forms.”
First Draw PPP Conditions for loan forgiveness
Can A PPP Loan Forgiveness Application Be Amended – For eligible borrowers First Draw PPP loans can be suitable to forgive loans. This happens when the loan payment is made within an 8 to 24 week period.
- The levels of compensation and employee pay are kept at a constant level.
- The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8– to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan proceeds are used on payroll and other eligible expenses; and
- At least 60% of proceeds go to the cost of payroll
- How to apply for loan forgiveness , and when
Once all of the loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive the loan payment from their PPP lender.
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