Does Student Loan Forgiveness Really Work

Does Student Loan Forgiveness Really Work

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 is also updated with new forms to comply with the most recent stimulus legislation. 

The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This is to facilitate the application for forgiveness. It also included conditions that encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans last year.

Does Student Loan Forgiveness Really Work

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within 24 hours of the date of enactment in the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released updated forms.”

First Draw PPP Loan forgiveness terms

Does Student Loan Forgiveness Really Work – For eligible borrowers, First Draw PPP loans are suitable to forgive loans. This applies if the loan disbursement occurs within an 8 to 24-week period.

  • Pay and worker levels are maintained
  • 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

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans to eligible customers are eligible for loan repayment when the loan is paid within an 8– to 24 week period.

  • Employee and compensation levels are kept in the same way in accordance with the First Draw PPP loan
  • The loan proceeds are used on payroll costs and other expenses that are eligible and
  • At least 60% of funds go to expenses for payroll
  • When and how do I apply for loan forgiveness

A borrower may apply for forgiveness after the loan’s proceeds for which the borrower has applied for forgiveness have been used. Borrowers can request forgiveness at any time up to the loan’s maturity date. If they do not file for forgiveness within 10 years of the date of expiration of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers will begin making loan payments to their PPP lender.

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