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. It also includes newly revised forms to comply with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The law required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions to encourage community banks to make more loans particularly to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Legitimate Student Loan Forgiveness Companies – For those who qualify, First Draw PPP loans are eligible to be forgiven. This happens when the loan payment is made within an 8– to 24 week period.
- This is also true for compensation and employees.
- The proceeds from the loan may be used to cover payroll costs or other expenses that are eligible.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week covered period following loan payment:
- Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
- The loan funds could be used to cover expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds are spent on payroll costs
- How do I apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any time until the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan are able to receive payment from their PPP lender.
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