The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the bill being adopted to make the application process for forgiveness, along with conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses that had trouble 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 PPP form, which is one page long, for loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published updated forms.”
First Draw PPP Terms of loan forgiveness
How Do I Know Which PPP Loan Forgiveness Form To Use – For borrowers who are eligible First Draw PPP loans are suitable for loan forgiveness. This applies if the loan disbursement occurs within an 8– to 24-week timeframe.
- Pay and worker levels are kept at a constant level.
- The loan proceeds can be used to pay for expenses for payroll or other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when 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 identical manner.
- The proceeds of the loan could be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of profits are used to pay for payroll expenses
- When and how do I apply for loan forgiveness
After all loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.