The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the process of applying for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding to small businesses that needed loans. The funds were used to mitigate the economic effects of the coronavirus pandemic. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was adopted to make the application process for forgiveness, along with conditions meant to encourage more bank loans by community banks, especially for minority-owned companies that struggled to get loans in the past.
“The Small Business Administration met the requirement to issue the single-page form for PPP loan forgiveness within 24 days of the date of enactment of 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 additional updated forms.”
Forgiveness terms in the first draw of PPP loans
Public Service Loan Forgiveness Pslf Employment Certification Form – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This applies if the loan disbursement occurs within an 8 to 24-week period.
- Pay and worker levels are kept at a constant level.
- The loan proceeds are spent on payroll costs as well as other expenses eligible for reimbursement; and
- A minimum of 60% of profits are spent on payroll costs
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans given to eligible borrowers qualify for full loan forgiveness if during the 8– to 24-week duration following loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels are maintained in the identical manner.
- The proceeds of the loan could be used to cover the cost of payroll as well as other expenses that are eligible.
- A minimum of 60% of the funds go to the cost of payroll
- What is the best time to apply for loan forgiveness?
A borrower can apply for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been used. Borrowers may apply for forgiveness at any time until the date of maturity. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan will be able to receive payment from their PPP lender.
Download Public Service Loan Forgiveness Pslf Employment Certification Form
Gallery of Public Service Loan Forgiveness Pslf Employment Certification Form
