The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the latest stimulus law.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 hours of the bill being signed into law to simplify the process of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned companies that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days of 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 more updated forms.”
Forgiveness terms in the first draw of PPP loans
City Of Milwaukee Forgivable Loan – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if within the 8 to 24-week covered period following the disbursement of loan:
- This is also true for pay and benefits for employees.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week time period after loan disbursement:
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.
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