Public Service Loan Forgiveness Employment Certification Form

The U.S. Small Business Administration released a one-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the most recent stimulus legislation. 

The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue simplified forms within 24 days after the legislation was adopted to make the procedure of applying for forgiveness, along with conditions that aim to increase the number of loans from community banks, particularly for minority-owned companies that were unable to obtain loans last year.

Public Service Loan Forgiveness Employment Certification Form

“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released new forms that were updated.”

First Draw PPP Loan forgiveness terms

Public Service Loan Forgiveness Employment Certification Form – For those who qualify First Draw PPP loans are suitable to be forgiven. This happens when the loan payment is made within an 8 to 24-week period.

  • Employee and compensation levels are maintained
  • The loan proceeds are spent on payroll costs and other expenses that are eligible and
  • Minimum 60% of proceeds go to payroll costs

Second Draw PPP Terms of Loan Forgiveness

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

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

After all loan funds have been utilized the borrower is eligible for forgiveness. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If borrowers do not apply for forgiveness within 10 months of the end of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.

Download Public Service Loan Forgiveness Employment Certification Form

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