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 are in line with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus epidemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the application process for forgiveness. It also included conditions meant to encourage more loans from community banks, especially for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours of the date of enactment under 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.”
Forgiveness terms in the first draw of PPP loans
Forgive Student Loan Debt To Stimulate The Economy – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This applies when the loan is disbursed within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment if the loan is paid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan funds could be used to pay payroll costs or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
- How to request loan forgiveness and when
After all loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers may apply for forgiveness at any point up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered, then PPP loan payments are not deferred any longer, and borrowers must make payment to their PPP lender.