The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was adopted to make the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, particularly for minority-owned companies that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Terms for forgiveness for the initial draw of PPP loans
Does The Department Of Education Forgiveness Student Loans – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness within the 8 to 24 week period that follows loan disbursement:
- The same goes for the pay and benefits for employees.
- The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week duration following loan disbursement:
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan funds could be used to cover payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are used for the cost of payroll
- What is the best time to apply for loan forgiveness?
Once all of the loan funds have been utilized, a borrower can apply for forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the date of expiration of the covered period and the loan is not renewed, PPP loan payments are no longer deferred, and the borrower will be required to make payment to their PPP lender.