The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and provided $284 billion of funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The legislation required that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions that encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 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 published more updated forms.”
Terms for forgiveness for the first draw of PPP loans
Texas Teacher Loan Forgiveness Forms – For those who qualify, First Draw PPP loans are suitable for loan forgiveness. This is when the loan payment is made within an 8 to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in the identical manner.
- The loan funds can be used to pay the cost of payroll as well as other expenses that are eligible.
- At least 60% of proceeds are used for the cost of payroll
- How to apply for loan forgiveness , and when to apply
After all loan funds have been utilized, a borrower can apply to be forgiven. The borrower can request forgiveness anytime up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan will be able to receive payment from their PPP lender.