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 are in line with the latest stimulus law.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 hours after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP within 24 days 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 issued new forms that were updated.”
Terms for forgiveness for the initial draw of PPP loans
Who Is Eligible For Student Loan Forgiveness – For those who qualify First Draw PPP loans are eligible to be forgiven. This is if the loan disbursement occurs within an 8– to 24-week period.
- It’s the same for employee compensation and the.
- The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
- A minimum of 60% of the funds go to payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8– to 24-week duration following loan disbursement:
- Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
- The loan proceeds are used on payroll costs as well as other eligible expenses and
- A minimum of 60% of the funds go to the cost of payroll
- How to apply for loan forgiveness , and when
Once all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the time period that was covered the PPP loan payments can not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.