The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated 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 that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.
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 24 days of the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms that were updated.”
First Draw PPP Terms of loan forgiveness
Student Loan Forgiveness Programs For Teachers – For those who qualify, First Draw PPP loans can be qualified to be forgiven. This applies when the loan payment is made within an 8 to 24-week period.
- Pay and worker levels are ensured
- The loan funds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week time period after loan disbursement:
- 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 costs as well as other eligible expenses and
- At least 60% of the profits are used to pay for payroll expenses
- How to request loan forgiveness and the time to apply
When all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments are no longer deferred, and borrowers will begin making payment to their PPP lender.