The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the current stimulus legislation.
Congress approved the COVID-19 relief plan last month, which offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to offset the economic impact of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours from 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.”
Forgiveness terms in the first draw of PPP loans
Temporary Expanded Public Service Loan Forgiveness Tepslf – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8-to 24-week period after the loan’s disbursement
- The same goes for the employee compensation and the.
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the profits are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24 week time period after loan payment:
- Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
- The proceeds of the loan could be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of the proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness , and when to apply
The borrower is eligible for forgiveness only after all loan proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months after the end of the time period that was covered, then PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.