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 that comply with the current stimulus law.
Congress approved the COVID-19 relief package in the month of March and included $284 billion of financing for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to facilitate the application for forgiveness. Additionally, it included conditions to 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 requirement of releasing the one page form for loan forgiveness under the PPP by 24 days after 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 published additional updated forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Ez Form Qualifications – For borrowers who are eligible First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs within an 8– to 24 week period.
- It’s the same for pay and benefits for employees.
- The loan funds are used on payroll expenses and other expenses that are eligible and
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the identical manner.
- The loan proceeds are spent on payroll expenses as well as other eligible expenses and
- Minimum 60% of funds go to the cost of payroll
- How do I request loan forgiveness and when
When all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the end of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred and the borrower will be required to make monthly payments to their PPP lender.