Temporary Public Service Loan Forgiveness

The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that meet the requirements of the latest stimulus legislation. 

The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions to encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans in the past.

Temporary Public Service Loan Forgiveness

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote 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

Temporary Public Service Loan Forgiveness – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week period after the disbursement of loan:

  • This is also true for employee compensation and the.
  • The loan proceeds can be used to pay the cost of payroll as well as other eligible expenses.
  • At least 60% of the profits are used for the cost of payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week duration following loan disbursement:

  • Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
  • The loan funds are used on payroll costs as well as other eligible expenses and
  • A minimum of 60% of the profits are used to pay for payroll expenses
  • How and when to apply for loan forgiveness

The borrower is eligible for forgiveness only after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers can apply for forgiveness any time up to the maturity date of the loan. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive payment from their PPP lender.

Download Temporary Public Service Loan Forgiveness

Gallery of Temporary Public Service Loan Forgiveness

Leave a Comment