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. The form also contains newly updated forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions that encourage community banks to make more loans particularly to minority-owned businesses who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Form To Forgive Federal Student Loans Through Fasfa – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8 to 24 week period that follows the disbursement of loan:
- The levels of compensation and employee pay are ensured
- The proceeds of the loan can be used to pay for expenses for payroll or other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is repaid within an 8to 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 are used on payroll costs and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
- How to request loan forgiveness and the time to apply
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any point up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.