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 are in line with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus epidemic. The law requires that the SBA provide simplified forms within 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more specifically to minority-owned companies that had difficulty 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 one-page PPP form loan forgiveness within the first 24 hours from 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 published new forms.”
Terms for forgiveness for the first draw of PPP loans
Loan Forgiveness For Doctors And Nurses – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24 week period that follows loan disbursement:
- It’s the same for pay and benefits for employees.
- The proceeds from the loan may be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week duration following loan payment:
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The loan funds could be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits are used for the cost of payroll
- When and how do I apply for loan forgiveness?
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any time up to the date at which the loan matures. Borrowers who do not request forgiveness within 10 month of the end date of the loan will be able to receive the loan payment from their PPP lender.