Apply For Public Service Student Loan Forgiveness

The U.S. Small Business Administration has released a 1-page form which makes it simpler to request forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the latest stimulus legislation. 

Congress approved the COVID-19 relief package in the month of March, which offered $284 billion in funding for small-scale businesses who 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 24 days of the legislation being signed into law to simplify the application process for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses that had trouble getting loans in the past.

Apply For Public Service Student Loan Forgiveness

“The Small Business Administration met the requirement to issue the one page form for PPP loan forgiveness within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued additional updated forms.”

Forgiveness terms in the initial draw of PPP loans

Apply For Public Service Student Loan Forgiveness – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness during the 8- to 24-week period after loan disbursement:

  • Employee and compensation levels are maintained
  • The loan proceeds are spent on payroll expenses as well as other expenses eligible for reimbursement; and
  • A minimum of 60% of the proceeds are spent on payroll costs

Second Draw PPP Loan Forgiveness Conditions

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

  • Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan funds can be used to pay for the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of proceeds are spent on payroll costs
  • How and when to apply for loan forgiveness?

After all loan funds have been utilized, a borrower can apply to be granted forgiveness. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the last day of the covered period the PPP loans are not deferred any longer, and borrowers will begin making loan payments to their PPP lender.

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