The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus law.
The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions to encourage banks in the community to lend more specifically to minority-owned companies that had difficulty 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 one-page form for PPP 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 issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Federal Student Loan Forgiveness Form For Disabled Veterans – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows the disbursement of loan:
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is paid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The proceeds of the loan can be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the profits are used to pay for payroll expenses
- How and when to apply for loan forgiveness?
Once all of the loan proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the date of expiration of the period covered and the loan is not renewed, PPP loans are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.