Education Loan Forgiveness

The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus legislation. 

Congress approved the COVID-19 relief package in the month of March and provided $284 billion of funding for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA release simplified forms within 24 hours of the signing into law. This was done to simplify the process of applying for forgiveness. The legislation also contained conditions that would encourage community banks to lend more, especially to minority-owned businesses who were unable to obtain loans last year.

Education Loan Forgiveness

“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans by 24 days after the date of enactment 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 issued new forms.”

First Draw PPP Terms of loan forgiveness

Education Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified to forgive loans. This happens when the loan payment is made within an 8 to 24 week period.

  • The same goes for the compensation and employees.
  • The proceeds from the loan may be used to cover the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of the proceeds are spent on payroll costs

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.

  • The levels of compensation and employee pay are maintained in the same manner as is required for the First Draw PPP loan
  • The proceeds of the loan could be used to pay the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of proceeds are spent on payroll costs
  • What is the best time to apply for loan forgiveness?

After all loan proceeds have been used the borrower is eligible to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If they do not file for forgiveness within 10 years of the last day of the covered period, then PPP loan payments are no longer deferred, and the borrower will be required to make payment to their PPP lender.

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Gallery of Education Loan Forgiveness

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