Federal Loan Debt Forgiveness

Federal Loan Debt Forgiveness

The U.S. Small Business Administration has released a single-page form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, as well as newly updated and revised forms that comply with the latest stimulus legislation. 

Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within the first 24 hours after the legislation was approved by the lawmaker to streamline the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, particularly for minority-owned businesses that had trouble getting loans last year.

Federal Loan Debt Forgiveness

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”

Forgiveness terms for the first draw of PPP loans

Federal Loan Debt Forgiveness – For borrowers who are eligible, First Draw PPP loans are qualified to be forgiven. This happens when the loan payment is made within an 8 to 24 week period.

  • It’s the same for employee compensation and the.
  • The proceeds from the loan may be used to cover expenses for payroll or other eligible expenses.
  • A minimum of 60% of the profits go towards payroll costs

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is paid within an 8to 24 week time frame.

  • Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan funds are used on payroll costs and other eligible expenses; and
  • A minimum of 60% of proceeds are used to pay for payroll expenses
  • How do I apply for loan forgiveness , and when to apply

Once all of the loan proceeds have been used The borrower may apply to be forgiven. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the period covered and the loan is not renewed, PPP loan payments can no longer deferred and the borrower will be required to make monthly payments to their PPP lender.

Download Federal Loan Debt Forgiveness

Gallery of Federal Loan Debt Forgiveness


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