How Much Would Student Loan Forgiveness Cost

How Much Would Student Loan Forgiveness Cost

The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the latest stimulus legislation. 

Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. It also included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses that had difficulty getting loans last year.

How Much Would Student Loan Forgiveness Cost

“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 released the updated forms.”

First Draw PPP Loan forgiveness terms

How Much Would Student Loan Forgiveness Cost – For those who qualify, First Draw PPP loans are qualified to forgive loans. 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 loan funds are used on payroll expenses and other expenses that are eligible and
  • A minimum of 60% of profits are used to pay for payroll expenses

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans for eligible customers are qualified for loan forgiveness when the loan is paid within an 8 24-week period.

  • The First Draw PPP loan requires that the compensation and employee levels be maintained in the identical manner.
  • The loan proceeds are spent on payroll expenses and other expenses that are eligible and
  • At least 60% of the proceeds are used for the cost of payroll
  • How and when to apply for loan forgiveness

Once all of the loan funds have been utilized, a borrower can apply to be granted forgiveness. Borrowers are able to apply for forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 years of the last day of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and the borrower will be required to make monthly payments to their PPP lender.

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