How To Fill Out Loan Forgiveness Form

How To Fill Out Loan Forgiveness Form

The U.S. Small Business Administration released a one-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the latest stimulus legislation. 

The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The law required that the SBA issue simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that would encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans last year.

How To Fill Out Loan Forgiveness Form

“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness by 24 days after the date of enactment of 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 released updated forms.”

First Draw PPP Loan forgiveness terms

How To Fill Out Loan Forgiveness Form – First Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24-week period after the loan’s disbursement

  • The levels of compensation and employee pay are maintained
  • The loan proceeds can be used to pay for payroll costs or other eligible expenses.
  • A minimum of 60% of the proceeds are used for the cost of payroll

Second Draw PPP Loan Forgiveness Conditions

Second Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness, if within the 8to 24 week time period after loan disbursement:

  • The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
  • The loan proceeds can be used to pay payroll costs or other eligible expenses.
  • At least 60% of profits go towards the cost of payroll
  • What is the best time to apply for loan forgiveness?

The borrower is eligible for forgiveness only after the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers can request forgiveness at any time up to the loan’s maturity date. Borrowers who don’t request forgiveness within 10 month of the end date of the loan will be able to receive loan payments from their PPP lender.

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