Fedloan Servicing Teacher Loan Forgiveness

The U.S. Small Business Administration released a one-page form designed to make it easier for applicants to complete the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the most recent stimulus legislation. 

The COVID-19 relief package that Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours after the legislation was signed into law to simplify the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned companies that struggled to get loans in the past.

Fedloan Servicing Teacher Loan Forgiveness

“The Small Business Administration met the requirement to issue the one page form for the forgiveness of PPP loans within 24 days of the date of the enactment of 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 published new forms that were updated.”

Terms for forgiveness for the first draw of PPP loans

Fedloan Servicing Teacher Loan Forgiveness – For eligible borrowers, First Draw PPP loans are qualified to be forgiven. This applies when the loan is disbursed within an 8 to 24-week period.

  • The levels of compensation and employee pay are ensured
  • The loan proceeds can be used to cover payroll costs or other eligible expenses.
  • Minimum 60% of funds go to the cost of payroll

Second Draw PPP Conditions for loan forgiveness

Second Draw PPP loans to qualified customers are eligible for loan forgiveness when the loan is paid within an 8– to 24 week time frame.

  • The First Draw PPP loan requires that the compensation and employee levels be maintained in the exact same way.
  • The loan proceeds are spent on payroll costs and other eligible expenses; and
  • A minimum of 60% of the profits are spent on payroll costs
  • When and how do I apply for loan forgiveness?

A borrower can apply for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been utilized. Borrowers can request forgiveness at any time until the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the last day of the period covered, then PPP loan payments are no longer deferred, and borrowers must make monthly payments to their PPP lender.

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