The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the latest stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. It also included conditions that encourage banks in the community to lend more, especially to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from 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 released more updated forms.”
First Draw PPP Loan forgiveness terms
Disaster Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness during the 8- to 24 week period that follows the disbursement of loan:
- It’s the same for employee compensation and the.
- The loan proceeds can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week duration following loan payment:
- Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of profits go towards expenses for payroll
- What is the best time to apply for loan forgiveness?
Once all of the loan’s proceeds have been used, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan will be able to receive loan payments from their PPP lender.