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. The form also contains newly updated forms that comply with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus pandemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Conditions for loan forgiveness
Loan Forgiveness For Stay At Home Moms – For eligible borrowers, First Draw PPP loans are qualified to be forgiven. This applies if the loan disbursement occurs within an 8 to 24 week period.
- Employee and compensation levels are ensured
- The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to eligible borrowers can be eligible for loan forgiveness when the loan is repaid within an 8to 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in an identical manner.
- The loan funds are used on payroll costs and other expenses that are eligible and
- At least 60% of proceeds go to expenses for payroll
- How do I apply for loan forgiveness , and the time to apply
Once all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are eligible to receive loan payments from their PPP lender.