Public Service Loan Forgiveness Pslf

Public Service Loan Forgiveness Pslf

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

Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses that needed loans. The money was intended to reduce the economic burden of the coronavirus outbreak. The law requires that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.

Public Service Loan Forgiveness Pslf

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

Forgiveness terms for the first draw of PPP loans

Public Service Loan Forgiveness Pslf – First Draw PPP loans given to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8 to 24-week period after the disbursement of loan:

  • Pay and worker levels are kept at a constant level.
  • The loan funds are used on payroll expenses and other eligible expenses; and
  • At least 60% of profits go towards the cost of payroll

Second Draw PPP Terms of Loan Forgiveness

Second Draw PPP loans for eligible customers are eligible for loan forgiveness if the loan is paid within an 8to 24-week time frame.

  • Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
  • The loan proceeds could be used to cover expenses for payroll or other eligible expenses.
  • A minimum of 60% of proceeds are used to pay for payroll expenses
  • How to request loan forgiveness and the time to apply

After all loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers may apply for forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 years of the end of the period covered the PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.

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