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 to comply with the latest stimulus law.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The law requires that the SBA issue simplified forms within 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans last year.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 days of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released the updated forms.”
First Draw PPP Conditions for loan forgiveness
Kabbage Ppp Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness within the 8 to 24 week period that follows the loan’s disbursement
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll costs and other expenses that are eligible and
- A minimum of 60% of the proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8– to 24-week duration following the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds are spent on payroll and other expenses that are eligible and
- A minimum of 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time until the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month of the end date of the loan will be able to receive the loan payment from their PPP lender.