Fafsa Public Service Loan Forgiveness

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

Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 days of the bill being adopted to make the application process for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, specifically for minority-owned companies that had trouble getting loans in the past.

Fafsa Public Service Loan Forgiveness

“The Small Business Administration met the requirement to issue the one page form for loan forgiveness under the PPP within 24 hours of the date of enactment of 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 issued updated forms.”

Forgiveness terms for the first draw of PPP loans

Fafsa Public Service Loan Forgiveness – For eligible borrowers First Draw PPP loans can be qualified to forgive loans. This happens if the loan disbursement occurs within an 8 to 24 week period.

  • This is also true for pay and benefits for employees.
  • The loan proceeds are used on payroll expenses and other eligible expenses; and
  • A minimum of 60% of the profits go towards payroll costs

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans given to eligible borrowers qualify for complete loan forgiveness, if within the 8to 24 week time period after loan disbursement:

  • The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
  • The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
  • A minimum of 60% of the proceeds are used to pay for payroll expenses
  • How to apply for loan forgiveness and when

The borrower is eligible for forgiveness after all loan proceeds for which the borrower wants forgiveness have been used. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who don’t request forgiveness within 10 months after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.

Download Fafsa Public Service Loan Forgiveness

Gallery of Fafsa Public Service Loan Forgiveness

Leave a Comment