The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus law.
Congress approved the COVID-19 relief package last month that provided $284 billion of funding for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the procedure of applying for forgiveness, along with conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for 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 additional updated forms.”
First Draw PPP Terms of loan forgiveness
Ppp Loans Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week covered period following the disbursement of loan:
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness, if within the 8– to 24-week time period after loan payment:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The proceeds of the loan can be used to pay expenses for payroll or other expenses that are eligible.
- At least 60% of profits are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
When all of the loan funds have been utilized The borrower may apply for forgiveness. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month of the end date of the loan are able to receive payment from their PPP lender.