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 most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding for small-scale businesses who needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The law required that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. It also included conditions that encourage banks in the community to lend more, especially to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
Terms for forgiveness for the first draw of PPP loans
Great Lakes Loan Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24 week period that follows the disbursement of loan:
- It’s the same for employee compensation and the.
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible borrowers are eligible for loan repayment if the loan is paid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
- The loan proceeds could be used to pay for the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
After all loan’s proceeds have been used the borrower is eligible to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.