College Closed Loan Forgiveness

College Closed Loan Forgiveness

The U.S. Small Business Administration issued a one-page application form that aims to simplify the process of applying to forgive Paycheck Protection Program loans, along with newly updated and revised forms to conform to the requirements of the most recent stimulus legislation. 

The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout of the coronavirus epidemic. The law required that the SBA provide 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. It also included conditions to encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans in the past.

College Closed Loan Forgiveness

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

Forgiveness terms for the first draw of PPP loans

College Closed Loan Forgiveness – For borrowers who are eligible First Draw PPP loans can be suitable for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24-week timeframe.

  • This is also true for pay and benefits for employees.
  • The loan proceeds are used on payroll expenses and other expenses that are eligible and
  • At least 60% of the profits are spent on payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week covered period following the loan’s disbursement

  • Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
  • The loan proceeds are spent on payroll costs and other eligible expenses; and
  • At least 60% of proceeds go to the cost of payroll
  • How to apply for loan forgiveness , and when

A borrower can apply for forgiveness after all loan proceeds for which the borrower wants forgiveness have been utilized. 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 of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.

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