The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus law.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The legislation required that the SBA provide simplified forms within 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. It also included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs stated that the Small Business Administration fulfilled the requirement to publish the one-page PPP form 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 released new forms that were updated.”
Forgiveness terms for the first draw of PPP loans
Loan Forgiveness Foir Former Students Of Itt – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24 week period that follows loan disbursement:
- Employee and compensation levels are ensured
- The loan proceeds are used on payroll and other eligible expenses; and
- A minimum of 60% of the funds go to the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The loan funds can be used to pay payroll costs or other expenses that are eligible.
- A minimum of 60% of proceeds are used for the cost of payroll
- How do I apply for loan forgiveness , and the time to apply
A borrower may apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. Borrowers can request forgiveness at any point up to the date at which the loan matures. 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 borrowers will begin making payment to their PPP lender.