The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief package last month that offered $284 billion in funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to make more loans 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 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Loan forgiveness terms
Loan Forgiveness Phone Calls – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24 week period that follows loan disbursement:
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week time period after the loan’s disbursement
- The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of profits are used to pay for payroll expenses
- How to apply for loan forgiveness , and when
When all of the loan proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can request forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the end of the covered period the PPP loan payments are no longer deferred, and borrowers must make loan payments to their PPP lender.
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Gallery of Loan Forgiveness Phone Calls
