10 Year Public Service Loan Forgiveness

10 Year Public Service Loan Forgiveness

The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that meet the requirements of the latest stimulus legislation. 

The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the legislation being adopted to make the process of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, specifically for minority-owned businesses who struggled to get loans last year.

10 Year Public Service Loan Forgiveness

“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”

First Draw PPP Conditions for loan forgiveness

10 Year Public Service Loan Forgiveness – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so during the 8- to 24-week covered period following the loan’s disbursement

  • The levels of compensation and employee pay are kept at a constant level.
  • The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
  • Minimum 60% of funds go to payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans to eligible borrowers are qualified for loan forgiveness if the loan is paid within an 8 24 week time frame.

  • The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
  • The loan proceeds are used on payroll costs and other expenses that are eligible and
  • At least 60% of the proceeds are used to pay for payroll expenses
  • How and when to apply for loan forgiveness?

The borrower is eligible for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been utilized. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are able to receive payment from their PPP lender.

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