Service Loan Forgiveness Program

The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation. 

Congress approved the COVID-19 relief plan last month that offered $284 billion in funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses who had trouble getting loans last year.

Service Loan Forgiveness Program

“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP by 24 days after the date of enactment 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 released updated forms.”

First Draw PPP Terms of loan forgiveness

Service Loan Forgiveness Program – First Draw PPP loans granted to eligible borrowers qualify for full loan forgiveness if within the 8 to 24-week covered period following the loan’s disbursement

  • Pay and worker levels are maintained
  • The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
  • Minimum 60% of proceeds go to expenses for payroll

Second Draw PPP Loan Forgiveness The terms

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

  • Employee and compensation levels are kept in the same way as is required for the First Draw PPP loan
  • The loan proceeds could be used to pay for the cost of payroll as well as other eligible expenses.
  • A minimum of 60% of the funds go to payroll costs
  • How and when to apply for loan forgiveness?

After all loan proceeds have been used, a borrower can apply for forgiveness. The borrower can request forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the end of the covered period the PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.

Download Service Loan Forgiveness Program

Gallery of Service Loan Forgiveness Program

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