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. 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 that offered $284 billion in funding to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 days of the legislation being signed into law to simplify the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that were unable to obtain 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 form for PPP loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Terms of loan forgiveness
Msw Loan Forgiveness Programs – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This applies if the loan disbursement occurs within an 8 to 24-week period.
- This is also true for pay and benefits for employees.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24-week time period after loan disbursement:
- The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
- The proceeds of the loan could be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of proceeds go to payroll costs
- What is the best time to apply for loan forgiveness
After all loan proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive the loan payment from their PPP lender.