Loan Forgiveness Qualifications

The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the latest stimulus law. 

The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funding for small businesses seeking forgiven loans to help to deal with the effects of economic collapse from the coronavirus outbreak. The package also mandated the SBA to issue streamlined forms within 24 days of the bill being adopted to make the process of applying for forgiveness, along with conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses that struggled to get loans in the past.

Loan Forgiveness Qualifications

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released the updated forms.”

First Draw PPP Conditions for loan forgiveness

Loan Forgiveness Qualifications – For borrowers who are eligible First Draw PPP loans can be qualified to forgive loans. This is when the loan payment is made within an 8 to 24 week period.

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

Second Draw PPP Terms of Loan Forgiveness

Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week time period after loan payment:

  • The First Draw PPP loan requires that the compensation and employee levels are maintained in the identical manner.
  • The loan proceeds could be used to cover the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of the proceeds are spent on payroll costs
  • How to request loan forgiveness and when to apply

Once all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. The borrower can request forgiveness at any time prior until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive payment from their PPP lender.

Download Loan Forgiveness Qualifications

Gallery of Loan Forgiveness Qualifications

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