The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The legislation required that the SBA release simplified forms within the first 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. It also included conditions that would encourage banks in the community to lend more, especially to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of 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 issued new forms.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Active Duty – For borrowers who are eligible, First Draw PPP loans can be qualified to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week timeframe.
- Employee and compensation levels are kept at a constant level.
- The loan proceeds can be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is repaid within an 8to 24-week time frame.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
- The proceeds of the loan could be used to pay the cost of payroll as well as other eligible expenses.
- At least 60% of the profits are used for the cost of payroll
- How do I apply for loan forgiveness , and when to apply
A borrower can apply for forgiveness only after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.