The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus law.
Congress approved the COVID-19 relief package in the month of March 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 epidemic. The law required that the SBA issue simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
Terms for forgiveness for the first draw of PPP loans
PPP Loan Forgiveness Form 3508 Vs 3508ez – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24 week period that follows the disbursement of loan:
- Employee and compensation levels are maintained
- The proceeds of the loan can be used to cover the cost of payroll as well as other expenses that are eligible.
- At least 60% of profits go towards the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is paid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
- The proceeds of the loan could be used to cover payroll costs or other expenses that are eligible.
- At least 60% of proceeds are spent on payroll costs
- How and when to apply for loan forgiveness?
When all of the loan’s proceeds have been used The borrower may apply to be granted forgiveness. Borrowers may apply for forgiveness at any time up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the last day of the time period that was covered, then PPP loans are not deferred any longer, and borrowers will begin making payment to their PPP lender.
Download PPP Loan Forgiveness Form 3508 Vs 3508ez
Gallery of PPP Loan Forgiveness Form 3508 Vs 3508ez
