The U.S. Small Business Administration has issued a one-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 law.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus epidemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the legislation being adopted to make the procedure of applying 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, said that the Small Business Administration fulfilled the requirement to issue 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 released more updated forms.”
First Draw PPP Loan forgiveness terms
Legislation For Student Loan Forgiveness – For borrowers who are eligible First Draw PPP loans are eligible for loan forgiveness. This applies when the loan payment is made within an 8– to 24-week period.
- The levels of compensation and employee pay are maintained
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week duration following loan payment:
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits go towards expenses for payroll
- How to apply for loan forgiveness and the time to apply
After all loan’s proceeds have been used, a borrower can apply for forgiveness. Borrowers may apply for forgiveness at any time up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 years of the last day of the time period that was covered, then PPP loan payments can not deferred any longer, and borrowers will begin making loan payments to their PPP lender.