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 to comply with the current stimulus legislation.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses in need of loans. This money was used to offset the economic impact of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 days 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 published new forms.”
Forgiveness terms in the first draw of PPP loans
Sallie Mae Tuition Answer Loan Forgiveness – For those who qualify First Draw PPP loans are qualified to be forgiven. This applies if the loan disbursement occurs within an 8 to 24 week period.
- It’s the same for compensation and employees.
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is paid within an 8– to 24 week time frame.
- The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
- The loan funds are used on payroll costs as well as other eligible expenses and
- Minimum 60% of funds go to the cost of payroll
- How do I apply for loan forgiveness and when
The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.