The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month and included $284 billion of financing to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans in the past.
“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans by 24 days after the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published more updated forms.”
First Draw PPP Terms of loan forgiveness
How To Get Your College Loans Forgiven – For those who qualify, First Draw PPP loans are eligible for loan forgiveness. This happens when the loan payment is made within an 8– to 24 week period.
- Employee and compensation levels are ensured
- The proceeds of the loan can be used to pay for the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– to 24 week time frame.
- Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- Minimum 60% of proceeds go to expenses for payroll
- How do I request loan forgiveness and when
When all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive payment from their PPP lender.