The U.S. Small Business Administration has released a 1-page form 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 most recent stimulus law.
The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA release simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. Additionally, it included 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 stated that the Small Business Administration fulfilled the obligation to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Nd State Student Loan Forgiveness Tax Form – For eligible borrowers First Draw PPP loans can be suitable for loan forgiveness. This applies when the loan is disbursed within an 8 to 24 week period.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay for the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to eligible borrowers can be qualified for loan forgiveness when the loan is paid within an 8– 24 week period.
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exact same way.
- The proceeds of the loan could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of profits are used for the cost of payroll
- How to apply for loan forgiveness and the time to apply
The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan will be able to receive payment from their PPP lender.