The U.S. Small Business Administration has released a 1-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the current stimulus legislation.
Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 days of the bill being approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, especially for minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans by 24 days after 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 issued additional updated forms.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness Not For Profit Hospital – For those who qualify, First Draw PPP loans are qualified to be forgiven. This is when the loan is disbursed within an 8 to 24-week timeframe.
- The same goes for the employee compensation and the.
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8– to 24-week covered period following loan disbursement:
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The proceeds of the loan could be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of the proceeds go to expenses for payroll
- What is the best time to apply for loan forgiveness?
The borrower is eligible for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the last day of the covered period, then PPP loan payments can not deferred any longer, and borrowers must make monthly payments to their PPP lender.
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