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 is also updated with new forms to comply with the latest stimulus law.
Congress approved the COVID-19 relief package last month, which provided $284 billion of funding to small businesses in need of loans. The money was intended to offset the economic impact of the coronavirus pandemic. The law requires that the SBA issue simplified forms within 24 hours of the signing into law. This is to make it easier to apply for forgiveness. It also included conditions that would encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 hours from the date of enactment under the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued more updated forms.”
Forgiveness terms in the initial draw of PPP loans
Student Loan Forgiveness Idaho – For eligible borrowers, First Draw PPP loans can be suitable to forgive loans. This happens when the loan payment is made within an 8 to 24-week timeframe.
- Pay and worker levels are ensured
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
- The loan funds can be used to pay expenses for payroll or other expenses that are eligible.
- Minimum 60% of proceeds go to expenses for payroll
- When and how do I apply for loan forgiveness?
A borrower may apply for forgiveness after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 month after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.