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 law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse from the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days of the legislation being signed into law to simplify the procedure of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who had trouble getting 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 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Cross River Bank Ppp Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be qualified to forgive loans. This happens if the loan disbursement occurs within an 8– to 24 week period.
- It’s the same for employee compensation and the.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of profits go towards payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week duration following the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of the proceeds go to payroll costs
- How to apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months of the end of the period covered and the loan is not renewed, PPP loans are no longer deferred and borrowers must make payment to their PPP lender.