The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses that needed loans. The funds were used to reduce the economic burden of the coronavirus outbreak. It also included a requirement that the SBA to issue simplified forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the procedure of applying for forgiveness, along with conditions meant to encourage more loans from community banks, specifically for minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 hours of the date of enactment under the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
Forgiveness terms in the initial draw of PPP loans
Public Service Loan Forgiveness Certification Form – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24 week period that follows the loan’s disbursement
- The same goes for the pay and benefits for employees.
- The loan funds are used on payroll and other eligible expenses; and
- A minimum of 60% of profits are used for the cost of payroll
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers are eligible for loan repayment when the loan is repaid within an 8to 24 week period.
- Pay and worker levels are kept in the same way as is required for the First Draw PPP loan
- The loan proceeds are used on payroll as well as other eligible expenses and
- A minimum of 60% of proceeds are used to pay for payroll expenses
- What is the best time to apply for loan forgiveness?
When all of the loan’s proceeds have been used the borrower is eligible for forgiveness. The borrower can apply for forgiveness at any time until the date of maturity. If borrowers do not apply for forgiveness within 10 months after the end of the covered period and the loan is not renewed, PPP loans are no longer deferred, and the borrower will be required to make payment to their PPP lender.
Download Public Service Loan Forgiveness Certification Form
Gallery of Public Service Loan Forgiveness Certification Form
