Covid Student Loan Forgiveness

Covid Student Loan Forgiveness

The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the most recent stimulus legislation. 

The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them deal with the financial fallout of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions that encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.

Covid Student Loan Forgiveness

“The Small Business Administration met the requirements to release the one page form for PPP loan forgiveness 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 released new forms that were updated.”

First Draw PPP Terms of loan forgiveness

Covid Student Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted total loan forgiveness during the 8- to 24-week period after the disbursement of loan:

  • Pay and worker levels are maintained
  • The loan proceeds are spent on payroll costs and other expenses that are eligible and
  • Minimum 60% of funds go to payroll costs

Second Draw PPP Conditions for loan forgiveness

Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24-week covered period following the loan’s disbursement

  • The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exact same way.
  • The loan proceeds could be used to pay the cost of payroll as well as other expenses that are eligible.
  • At least 60% of profits are spent on payroll costs
  • How to apply for loan forgiveness and the time to apply

Once all of the loan funds have been utilized the borrower is eligible to be granted forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the date of expiration of the time period that was covered the PPP loan payments are no longer deferred, and the borrower will be required to make loan payments to their PPP lender.

Download Covid Student Loan Forgiveness

Gallery of Covid Student Loan Forgiveness