The U.S. Small Business Administration has released a form of one page that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the current 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 reduce the economic burden of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the application process for forgiveness, along with conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 days from 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 published new forms.”
First Draw PPP Loan forgiveness terms
Sample Letter For Student Loan Forgiveness – For eligible borrowers First Draw PPP loans are eligible to forgive loans. This happens if the loan disbursement occurs within an 8 to 24 week period.
- This is also true for compensation and employees.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of funds go to the cost of payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans for eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8to 24-week time frame.
- Pay and worker levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the proceeds go to expenses for payroll
- What is the best time to apply for loan forgiveness
When all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers can request forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are eligible to receive loan payments from their PPP lender.