Can You Really Get Student Loan Forgiveness

Can You Really Get Student Loan Forgiveness

The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the most recent stimulus law. 

The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout from the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. Additionally, it included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.

Can You Really Get Student Loan Forgiveness

“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans within 24 hours of 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 released the updated forms.”

First Draw PPP Conditions for loan forgiveness

Can You Really Get Student Loan Forgiveness – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so during the 8- to 24-week covered period following the loan’s disbursement

  • Pay and worker levels are maintained
  • The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
  • At least 60% of profits are spent on payroll costs

Second Draw PPP Loan Forgiveness Terms

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

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

A borrower can apply for forgiveness once all loan proceeds for which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months after the date they will be able to repay the loan will be able to receive the loan payment from their PPP lender.

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