Loan Forgiveness Consolidation

Loan Forgiveness Consolidation

The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation. 

The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was adopted to make the procedure of applying for forgiveness. It also included conditions meant to encourage more loans from community banks, specifically for minority-owned companies that were unable to obtain loans last year.

Loan Forgiveness Consolidation

“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”

Terms for forgiveness for the first draw of PPP loans

Loan Forgiveness Consolidation – First Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week period after loan disbursement:

  • The same goes for the compensation and employees.
  • The loan proceeds can be used to pay for the cost of payroll as well as other eligible expenses.
  • At least 60% of proceeds are used for the cost of payroll

Second Draw PPP Terms of Loan Forgiveness

Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is paid within an 8 24-week period.

  • Employee and compensation levels are maintained in the same way as required for the First Draw PPP loan
  • The loan proceeds can be used to pay for payroll costs or other eligible expenses.
  • A minimum of 60% of the profits go towards expenses for payroll
  • When and how do I apply for loan forgiveness

A borrower can apply for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time up to the date of maturity. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.

Download Loan Forgiveness Consolidation

Gallery of Loan Forgiveness Consolidation


Leave a Reply

Your email address will not be published.