The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month, which included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus outbreak. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. Additionally, it included conditions that would encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated 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. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Loan forgiveness terms
Can I Get My Student Loans Forgiven – For eligible borrowers, First Draw PPP loans can be eligible to forgive loans. This happens when the loan payment is made within an 8– to 24-week timeframe.
- Employee and compensation levels are ensured
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of profits are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible 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 are maintained in the exactly the same manner.
- The proceeds of the loan can be used to cover payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used for the cost of payroll
- How to apply for loan forgiveness and the time to apply
When all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan are able to receive loan payments from their PPP lender.