The U.S. Small Business Administration has released a 1-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 current stimulus law.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses that struggled to get loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours of 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 published more updated forms.”
First Draw PPP Loan forgiveness terms
Ppp Loan Forgiveness Application Due Date – For borrowers who are eligible, First Draw PPP loans can be qualified for loan forgiveness. This is when the loan payment is made within an 8 to 24-week timeframe.
- This is also true for compensation and employees.
- The proceeds from the loan may be used to pay the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan funds are used on payroll as well as other eligible expenses and
- At least 60% of the proceeds are spent on payroll costs
- When and how do I apply for loan forgiveness?
Once all of the loan’s proceeds have been used, a borrower can apply to be forgiven. The borrower can apply for forgiveness at any point up to the date of maturity. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan are able to receive payment from their PPP lender.