The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus law.
Congress approved the COVID-19 relief plan last month and provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. It also included conditions that would encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released additional updated forms.”
First Draw PPP Loan forgiveness terms
Will Student Loans Be Forgiven – For eligible borrowers, First Draw PPP loans can be suitable for loan forgiveness. This happens if the loan disbursement occurs within an 8 to 24-week period.
- It’s the same for employee compensation and the.
- The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8– 24 week time frame.
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan funds are used on payroll costs and other eligible expenses; and
- Minimum 60% of profits go towards expenses for payroll
- How to apply for loan forgiveness and when
Once all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can request forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 years of the last day of the covered period the PPP loan payments are not deferred any longer, and borrowers must make loan payments to their PPP lender.