The U.S. Small Business Administration has released a 1-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which provided $284 billion of funding to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being adopted to make the procedure of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish 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.”
First Draw PPP Conditions for loan forgiveness
Itt Loan Forgiveness Form – For those who qualify, First Draw PPP loans are qualified for loan forgiveness. This is when the loan payment is made within an 8 to 24-week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is paid 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 proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of profits are used for the cost of payroll
- How do I apply for loan forgiveness and when
When all of the loan proceeds have been used, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the period covered, then PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.