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. The form is also updated with new forms that comply with the latest stimulus legislation.
Congress approved the COVID-19 relief plan last month that provided $284 billion of funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 days of the bill being adopted to make the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of the enactment of 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.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Letter Template – For eligible borrowers First Draw PPP loans can be qualified for loan forgiveness. This happens when the loan is disbursed within an 8 to 24-week timeframe.
- Employee and compensation levels are maintained
- The proceeds from the loan may be used to pay the cost of payroll as well as other eligible expenses.
- Minimum 60% of profits go towards the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is repaid within an 8to 24-week time frame.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of proceeds are used for the cost of payroll
- How do I request loan forgiveness and when to apply
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers may apply for forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months of the end of the period covered, then PPP loans are no longer deferred, and borrowers must make loan payments to their PPP lender.