Calls From Student Loan Forgiveness Center

The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms to comply with the most recent stimulus legislation. 

Congress approved the COVID-19 relief plan last month that provided $284 billion of funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus outbreak. The legislation required that the SBA issue simplified forms within 24 hours of the signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more specifically to minority-owned companies who had a difficult time getting loans last year.

Calls From Student Loan Forgiveness Center

“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP by 24 days after the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”

Forgiveness terms in the initial draw of PPP loans

Calls From Student Loan Forgiveness Center – First Draw PPP loans granted to eligible borrowers qualify for total loan forgiveness within the 8-to 24 week period that follows the disbursement of loan:

  • The levels of compensation and employee pay are ensured
  • The proceeds from the loan may be used to cover payroll costs or other eligible expenses.
  • At least 60% of funds go to payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week covered period following loan payment:

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

After all loan proceeds have been used the borrower is eligible to be granted forgiveness. The borrower can apply for forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months of the date of expiration of the period covered the PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.

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