The U.S. Small Business Administration has released a 1-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 package last month that provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that had trouble getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”
Forgiveness terms for the initial draw of PPP loans
Us Department Of Education Student Loan Forgiveness – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24 week period that follows loan disbursement:
- The same goes for the employee compensation and the.
- The loan proceeds are spent on payroll costs and other expenses that are eligible and
- At least 60% of the profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible customers are eligible for loan forgiveness when the loan is repaid within an 8– 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the identical manner.
- The loan funds could be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of profits are spent on payroll costs
- How to apply for loan forgiveness and when
A borrower can apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. 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 years of the last day of the period covered the PPP loans are no longer deferred and borrowers must make payment to their PPP lender.