The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus legislation.
Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus epidemic. The legislation required that the SBA release simplified forms within 24 hours of the signing into law. This is to simplify the process of applying 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 last year.
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 days from the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Schools – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if within the 8-to 24-week period after the loan’s disbursement
- The levels of compensation and employee pay are ensured
- The loan proceeds can be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the profits go towards expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is paid within an 8– to 24 week period.
- Employee and compensation levels are maintained in the same manner as is required for the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- Minimum 60% of funds go to payroll costs
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any time until the date at which the loan matures. 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.