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. The form is also updated with new forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 days after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses that struggled to get loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 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 published new forms that were updated.”
First Draw PPP Terms of loan forgiveness
How To Sign Up For Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans are eligible to be forgiven. This happens if the loan disbursement occurs within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The loan proceeds can be used to cover expenses for payroll or other expenses that are eligible.
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness if the loan is paid within an 8– 24 week time frame.
- The levels of compensation and employee pay are kept in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll as well as other eligible expenses and
- At least 60% of funds go to expenses for payroll
- What is the best time to apply for loan forgiveness
Once all of the loan funds have been utilized, a borrower can apply for forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are able to receive loan payments from their PPP lender.