Loan Forgiveness Federal Employees Form

The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that conform to the requirements of the most recent stimulus legislation. 

Congress approved the COVID-19 relief plan last month, which included $284 billion of financing for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The legislation 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 encourage community banks to make more loans particularly to minority-owned businesses that had difficulty getting loans last year.

Loan Forgiveness Federal Employees Form

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

Forgiveness terms in the initial draw of PPP loans

Loan Forgiveness Federal Employees Form – First Draw PPP loans made 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:

  • This is also true for compensation and employees.
  • The proceeds of the loan can be used to pay payroll costs or other eligible expenses.
  • At least 60% of the proceeds are spent on payroll costs

Second Draw PPP Loan Forgiveness Conditions

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

  • The levels of compensation and employee pay are kept in the same way in accordance with the First Draw PPP loan
  • The loan funds are used on payroll and other eligible expenses; and
  • A minimum of 60% of the proceeds go to expenses for payroll
  • What is the best time to apply for loan forgiveness

A borrower can apply for forgiveness once the loan’s proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If they do not file for forgiveness within 10 months after the end of the period covered the PPP loan payments are no longer deferred and borrowers will begin making payment to their PPP lender.

Download Loan Forgiveness Federal Employees Form

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