Public Service Loan Forgiveness Canada

The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms that comply with the latest stimulus legislation. 

The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within 24 days after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, specifically for minority-owned businesses who had trouble getting loans in the past.

Public Service Loan Forgiveness Canada

“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans within 24 hours of the date of the enactment of 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 published more updated forms.”

First Draw PPP Loan forgiveness terms

Public Service Loan Forgiveness Canada – For eligible borrowers, First Draw PPP loans are eligible to be forgiven. This is when the loan is disbursed within an 8 to 24 week period.

  • Pay and worker levels are kept at a constant level.
  • The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
  • At least 60% of proceeds are used for the cost of payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week duration following loan disbursement:

  • The First Draw PPP loan requires that the employee and compensation levels be maintained in the identical manner.
  • The loan proceeds can be used to pay the cost of payroll as well as other expenses that are eligible.
  • At least 60% of the proceeds are used to pay for payroll expenses
  • How and when to apply for loan forgiveness

After all loan’s proceeds have been used, a borrower can apply to be granted forgiveness. The borrower can apply for forgiveness at any time until the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months of the end date of the loan are able to receive the loan payment from their PPP lender.

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