Loan Forgiveness Application

The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that meet the requirements of the most recent stimulus legislation. 

Congress approved the COVID-19 relief package last month and included $284 billion of financing for small-scale businesses who needed loans. The money was intended to reduce the economic burden of the coronavirus outbreak. 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 procedure of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that struggled to get loans in the past.

Loan Forgiveness Application

“The Small Business Administration met the requirement of releasing the one-page form for the forgiveness of PPP loans within 24 hours 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 released additional updated forms.”

Terms for forgiveness for the initial draw of PPP loans

Loan Forgiveness Application – For those who qualify, First Draw PPP loans are suitable to forgive loans. This is if the loan disbursement occurs within an 8 to 24-week period.

  • It’s the same for compensation and employees.
  • The loan proceeds are used on payroll expenses and other expenses that are eligible and
  • At least 60% of the proceeds are spent on payroll costs

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week duration following the loan’s disbursement

  • The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
  • The loan funds could be used to cover expenses for payroll or other eligible expenses.
  • A minimum of 60% of the profits go towards expenses for payroll
  • How to apply for loan forgiveness and when

After all loan funds have been utilized the borrower is eligible to be forgiven. Borrowers can request forgiveness at any point up to the loan’s maturity date. Borrowers who do not request forgiveness within 10 months of the end date of the loan are eligible to receive payment from their PPP lender.

Download Loan Forgiveness Application

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