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 latest stimulus law.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned companies that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated 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. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
Former Itt Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are eligible to be forgiven. This applies if the loan disbursement occurs within an 8– to 24-week period.
- Employee and compensation levels are kept at a constant level.
- The loan funds are used on payroll and other expenses that are eligible and
- At least 60% of funds go to payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8to 24-week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan proceeds could be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of proceeds are spent on payroll costs
- What is the best time to apply for loan forgiveness
The borrower is eligible for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are eligible to receive loan payments from their PPP lender.