How To Get Federal Student Loans Forgiven

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 current stimulus law. 

Congress approved the COVID-19 relief plan last month and offered $284 billion in funding to small businesses in need of loans. This money was used to mitigate the economic effects of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within the first 24 hours of the legislation being adopted to make the application process for forgiveness, along with conditions meant to encourage more bank loans by community banks, particularly for minority-owned businesses who were unable to obtain loans in the past.

How To Get Federal Student Loans Forgiven

“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 hours of the date of 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 released updated forms.”

First Draw PPP Terms of loan forgiveness

How To Get Federal Student Loans Forgiven – 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 loan’s disbursement

  • Employee and compensation levels are ensured
  • The loan proceeds are used on payroll costs as well as other expenses eligible for reimbursement; and
  • Minimum 60% of proceeds go to the cost of payroll

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week covered period following loan disbursement:

  • Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan funds could be used to cover the cost of payroll as well as other eligible expenses.
  • A minimum of 60% of proceeds are used to pay for payroll expenses
  • How to apply for loan forgiveness , and when to apply

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

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