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 that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March that offered $284 billion in funding to small businesses in need of loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being signed into law to simplify the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses that had trouble getting loans in the past.
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 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 released more updated forms.”
First Draw PPP Loan forgiveness terms
Doe Student Loan Forgiveness – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week period after loan disbursement:
- Employee and compensation levels are ensured
- The loan proceeds can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans for eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
When all of the loan proceeds have been used the borrower is eligible for forgiveness. The borrower can request forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.
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