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 is also updated with new 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 money was intended to reduce the economic burden of the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within the first 24 hours after the legislation was signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans in the past.
“The Small Business Administration met the requirement of releasing the one page form for PPP loan forgiveness within 24 hours of the date of enactment 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 additional updated forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Application How Long – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24 week period that follows the loan’s disbursement
- The same goes for the employee compensation and the.
- The loan proceeds can be used to cover expenses for payroll or other eligible expenses.
- At least 60% of proceeds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified borrowers can be eligible for loan repayment when the loan is paid within an 8– to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- Minimum 60% of proceeds go to payroll costs
- How do I apply for loan forgiveness and when
Once all of the loan funds have been utilized The borrower may apply for forgiveness. The borrower can request forgiveness anytime up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive payment from their PPP lender.