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 is also updated with new forms that comply with the current stimulus law.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. Additionally, it included conditions to encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote 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 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 released more updated forms.”
Forgiveness terms for the initial draw of PPP loans
Obama Loan Forgiveness Reviews – For those who qualify, First Draw PPP loans are eligible to be forgiven. This is when the loan payment is made within an 8 to 24 week period.
- The same goes for the pay and benefits for employees.
- The proceeds from the loan may be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of the proceeds are used to pay for payroll expenses
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is repaid within an 8– to 24-week period.
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of proceeds are spent on payroll costs
- How do I apply for loan forgiveness , and when
A borrower may apply for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 years of the last day of the covered period and the loan is not renewed, PPP loan payments are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.