The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the latest stimulus law.
Congress approved the COVID-19 relief plan last month 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. 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. The legislation also contained conditions that aim to increase the number of 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 stated that the Small Business Administration fulfilled the obligation 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. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”
First Draw PPP Terms of loan forgiveness
Social Security Student Loan Forgiveness – For those who qualify First Draw PPP loans are eligible for loan forgiveness. This applies when the loan is disbursed within an 8– to 24 week period.
- Employee and compensation levels are maintained
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is repaid within an 8– to 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan funds are used on payroll as well as other eligible expenses and
- Minimum 60% of proceeds go to the cost of payroll
- How to apply for loan forgiveness and when
A borrower can apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the end of the time period that was covered, then PPP loan payments can no longer deferred and borrowers will begin making monthly payments to their PPP lender.