Federal Service Loan Forgiveness Form

Federal Service Loan Forgiveness Form

The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus legislation. 

The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours of the legislation being adopted to make the application process for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, especially for minority-owned businesses that struggled to get loans last year.

Federal Service Loan Forgiveness Form

“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness within 24 days of the date of enactment 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 new forms.”

Forgiveness terms for the initial draw of PPP loans

Federal Service Loan Forgiveness Form – For eligible borrowers First Draw PPP loans are qualified to be forgiven. This applies when the loan payment is made within an 8 to 24-week timeframe.

  • The levels of compensation and employee pay are maintained
  • The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
  • At least 60% of profits are used for the cost of payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8to 24-week duration following loan disbursement:

  • The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
  • The loan proceeds are spent on payroll costs and other expenses that are eligible and
  • A minimum of 60% of the profits go towards expenses for payroll
  • How do I apply for loan forgiveness , and the time to apply

Once all of the loan proceeds have been used, a borrower can apply for forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive payment from their PPP lender.

Download Federal Service Loan Forgiveness Form

Gallery of Federal Service Loan Forgiveness Form