Global Student Loan Forgiveness

Global Student Loan Forgiveness

The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, as well as 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 of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within the first 24 hours of the legislation being signed into law to simplify the application process for forgiveness. It also included conditions that aim to increase the number of loans from community banks, specifically for minority-owned companies that had trouble getting loans in the past.

Global Student Loan Forgiveness

“The Small Business Administration met the requirements to release the one-page form for the forgiveness of PPP loans within 24 days of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”

Forgiveness terms in the first draw of PPP loans

Global Student Loan Forgiveness – For borrowers who are eligible, First Draw PPP loans can be eligible for loan forgiveness. This is if the loan disbursement occurs within an 8 to 24 week period.

  • Pay and worker levels are kept at a constant level.
  • The proceeds from the loan may be used to pay for the cost of payroll as well as other eligible expenses.
  • A minimum of 60% of the proceeds go to payroll costs

Second Draw PPP Loan Forgiveness Conditions

Second Draw PPP loans for eligible borrowers can be 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 loan proceeds are used on payroll costs and other eligible expenses; and
  • At least 60% of profits go towards payroll costs
  • What is the best time to apply for loan forgiveness?

Once all of the loan funds have been utilized, a borrower can apply to be forgiven. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the end of the time period that was covered and the loan is not renewed, PPP loan payments can no longer deferred, and borrowers must make loan payments to their PPP lender.

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