The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus law.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus pandemic. The legislation required that the SBA provide simplified forms within 24 hours of the signing into law. This was to facilitate the application for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more, especially to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued more updated forms.”
First Draw PPP Conditions for loan forgiveness
Trusted Insight Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24 week period that follows the disbursement of loan:
- This is also true for employee compensation and the.
- The proceeds from the loan may be used to pay for expenses for payroll or other expenses that are eligible.
- Minimum 60% of profits go towards payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible customers are eligible for loan repayment when the loan is paid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds could be used to pay for payroll costs or other eligible expenses.
- A minimum of 60% of proceeds are spent on payroll costs
- How do I apply for loan forgiveness , and when to apply
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 years of the date of expiration of the time period that was covered, then PPP loan payments are not deferred any longer, and borrowers will begin making payment to their PPP lender.