10k Student Loan Forgiveness

The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus law. 

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 money was intended to reduce the economic burden of the coronavirus pandemic. The legislation required that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to make more loans specifically to minority-owned companies who were unable to obtain loans last year.

10k Student Loan Forgiveness

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within 24 days 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 issued the updated forms.”

Terms for forgiveness for the first draw of PPP loans

10k Student Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24-week period after loan disbursement:

  • The levels of compensation and employee pay are maintained
  • The loan funds are used on payroll expenses as well as other expenses eligible for reimbursement; and
  • At least 60% of proceeds go to expenses for payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week time period after loan payment:

  • The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
  • The loan funds are used on payroll costs and other eligible expenses; and
  • Minimum 60% of funds go to expenses for payroll
  • How and when to apply for loan forgiveness?

A borrower can apply for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 months of the end date of the loan will be able to receive the loan payment from their PPP lender.

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