Fedloan Public Service Loan Forgiveness Employment Certification Form

Fedloan Public Service Loan Forgiveness Employment Certification Form

The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms to meet the requirements of the most recent stimulus legislation. 

The COVID-19 aid package Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans in the past.

Fedloan Public Service Loan Forgiveness Employment Certification Form

“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness 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 released additional updated forms.”

Forgiveness terms in the initial draw of PPP loans

Fedloan Public Service Loan Forgiveness Employment Certification Form – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This happens if the loan disbursement occurs within an 8 to 24-week timeframe.

  • The levels of compensation and employee pay are ensured
  • The proceeds from the loan may be used to pay payroll costs or other eligible expenses.
  • At least 60% of funds go to the cost of payroll

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans to qualified customers are qualified for loan forgiveness if the loan is paid within an 8– to 24 week period.

  • Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan proceeds can be used to pay for expenses for payroll or other eligible expenses.
  • A minimum of 60% of the proceeds are spent on payroll costs
  • How and when to apply for loan forgiveness?

Once all of the loan funds have been utilized the borrower is eligible to be forgiven. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the last day of the period covered and the loan is not renewed, PPP loan payments can no longer deferred and borrowers must make payment to their PPP lender.

Download Fedloan Public Service Loan Forgiveness Employment Certification Form

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