Federal Student Loan Forgiveness Phone Call

Federal Student Loan Forgiveness Phone Call

The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law. 

The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus outbreak. The law required that the SBA issue simplified forms within 24 hours of the signing into law. This was done to facilitate the application for forgiveness. It also included conditions to encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting loans in the past.

Federal Student Loan Forgiveness Phone Call

“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 published new forms that were updated.”

Forgiveness terms in the first draw of PPP loans

Federal Student Loan Forgiveness Phone Call – First Draw PPP loans made to eligible borrowers qualify for complete loan forgiveness if they do so within the 8-to 24 week period that follows the disbursement of loan:

  • The same goes for the pay and benefits for employees.
  • The loan proceeds are spent on payroll as well as other expenses eligible for reimbursement; and
  • At least 60% of the proceeds are used for the cost of payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24-week duration following the loan’s disbursement

  • The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exactly the same manner.
  • The loan funds are used on payroll and other expenses that are eligible and
  • At least 60% of the proceeds are used to pay for payroll expenses
  • How do I request loan forgiveness and when

After all loan funds have been utilized The borrower may apply for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. If they do not file for forgiveness within 10 months of the last day of the time period that was covered, then PPP loans are not deferred any longer, and borrowers will begin making payment to their PPP lender.

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