The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding to small businesses in need of loans. The money was intended to reduce the economic burden 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 make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
Forgiveness terms in the first draw of PPP loans
How Can I Get My Student Loans Forgiven – For borrowers who are eligible, First Draw PPP loans can be qualified for loan forgiveness. This applies when the loan is disbursed within an 8– to 24-week period.
- It’s the same for employee compensation and the.
- The loan funds are used on payroll and other eligible expenses; and
- At least 60% of funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment when the loan is paid within an 8– 24-week period.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds could be used to cover expenses for payroll or other expenses that are eligible.
- Minimum 60% of profits go towards the cost of payroll
- How to request loan forgiveness and when
When all of the loan funds have been utilized The borrower may apply for forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the period covered the PPP loans are no longer deferred, and borrowers must make loan payments to their PPP lender.