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 is also updated with new forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief package in the month of March and offered $284 billion in funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The law required that the SBA provide simplified forms within 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that would 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, wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours of 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 updated forms.”
Forgiveness terms in the initial draw of PPP loans
President Trump Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are suitable to be forgiven. This happens if the loan disbursement occurs within an 8– to 24-week timeframe.
- The same goes for the compensation and employees.
- The loan proceeds can be used to pay payroll costs or other eligible expenses.
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan repayment when the loan is paid within an 8– 24 week time frame.
- Pay and worker levels are maintained in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll expenses and other eligible expenses; and
- A minimum of 60% of the funds go to the cost of payroll
- How and when to apply for loan forgiveness
The borrower is eligible for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time until the date of maturity. If they do not file for forgiveness within 10 months after the date of expiration of the time period that was covered, then PPP loans are no longer deferred and borrowers must make loan payments to their PPP lender.
Download President Trump Student Loan Forgiveness
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