How To Apply For Student Loan Forgiveness

How To Apply For Student Loan Forgiveness

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. It also includes newly revised forms that comply with the most recent stimulus law. 

The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in funds for small businesses that want forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 days of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans last year.

How To Apply For Student Loan Forgiveness

“The Small Business Administration met the requirement to issue the one-page form for PPP loan forgiveness by 24 days after the date of enactment 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 more updated forms.”

Terms for forgiveness for the first draw of PPP loans

How To Apply For Student Loan Forgiveness – First Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8-to 24-week period after the disbursement of loan:

  • The levels of compensation and employee pay are ensured
  • The loan proceeds can be used to cover the cost of payroll as well as other eligible expenses.
  • A minimum of 60% of the funds go to expenses for payroll

Second Draw PPP Terms of Loan Forgiveness

Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24 week covered period following the loan’s disbursement

  • Pay and worker levels are kept in the same way in accordance with the First Draw PPP loan
  • The loan proceeds could be used to pay for payroll costs or other eligible expenses.
  • At least 60% of proceeds are used to pay for payroll expenses
  • How to apply for loan forgiveness , and the time to apply

A borrower may apply for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months of the last day of the period covered, then PPP loans are no longer deferred, and the borrower will be required to make payment to their PPP lender.

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