Federal Loan Forgiveness Form

The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the current stimulus law. 

The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 days of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses that had trouble getting loans in the past.

Federal Loan Forgiveness Form

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to publish the one-page PPP form loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published additional updated forms.”

First Draw PPP Conditions for loan forgiveness

Federal Loan Forgiveness Form – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows loan disbursement:

  • The levels of compensation and employee pay are maintained
  • The loan proceeds are used on payroll expenses and other expenses that are eligible and
  • A minimum of 60% of the proceeds are spent on payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week duration following loan payment:

  • The First Draw PPP loan requires that the compensation and employee levels are maintained in the exactly the same manner.
  • The loan proceeds can be used to pay for payroll costs or other expenses that are eligible.
  • At least 60% of funds go to payroll costs
  • How to apply for loan forgiveness , and when to apply

A borrower can apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the covered period and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.

Download Federal Loan Forgiveness Form

Gallery of Federal Loan Forgiveness Form

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