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 to comply with the most recent stimulus law.
Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions that would encourage community banks to lend more specifically to minority-owned companies that had difficulty getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Terms of loan forgiveness
Ihda Forgivable Loan – For borrowers who are eligible, First Draw PPP loans are qualified to be forgiven. This is when the loan is disbursed within an 8– to 24 week period.
- The same goes for the pay and benefits for employees.
- The loan funds are used on payroll costs and other eligible expenses; and
- A minimum of 60% of the profits are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is repaid within an 8to 24 week time frame.
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness and the time to apply
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers must make payment to their PPP lender.