Are Student Loans Going To Be Forgiven

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 current stimulus legislation. 

The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgivable loans to help them to deal with the effects of economic collapse from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being adopted to make the application process for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, specifically for minority-owned companies that struggled to get loans last year.

Are Student Loans Going To Be Forgiven

“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 hours of the date of the 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 published new forms that were updated.”

First Draw PPP Loan forgiveness terms

Are Student Loans Going To Be Forgiven – First Draw PPP loans made to borrowers who are eligible can be granted complete loan forgiveness if they do so within the 8-to 24 week period that follows the loan’s disbursement

  • Employee and compensation levels are kept at a constant level.
  • The loan funds are used on payroll and other eligible expenses; and
  • A minimum of 60% of the proceeds go to the cost of payroll

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24-week time period after the loan’s disbursement

  • Employee and compensation levels are kept in the same way as required for the First Draw PPP loan
  • The loan proceeds can be used to pay for payroll costs or other eligible expenses.
  • A minimum of 60% of the profits go towards payroll costs
  • When and how do I apply for loan forgiveness

The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 years of the last day of the time period that was covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers must make loan payments to their PPP lender.

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