How To Know If I Qualify For Student Loan Forgiveness

How To Know If I Qualify For Student Loan Forgiveness

The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, along with newly updated and revised forms to comply with the latest stimulus legislation. 

Congress approved the COVID-19 relief plan last month that provided $284 billion of funding to small businesses that needed loans. The funds were used to offset the economic impact of the coronavirus epidemic. The legislation required that the SBA release simplified forms within 24 hours of the signing into law. This is to simplify the process of applying for forgiveness. The legislation also contained conditions that encourage banks in the community to lend more specifically to minority-owned companies who were unable to obtain loans last year.

How To Know If I Qualify For Student Loan Forgiveness

“The Small Business Administration met the requirements to release the single-page form for the forgiveness of PPP loans by 24 days after the date of the 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 updated forms.”

Forgiveness terms in the first draw of PPP loans

How To Know If I Qualify For Student Loan Forgiveness – For those who qualify First Draw PPP loans can be qualified to forgive loans. This applies if the loan disbursement occurs within an 8 to 24 week period.

  • It’s the same for compensation and employees.
  • The loan funds are used on payroll and other eligible expenses; and
  • A minimum of 60% of the funds go to the cost of payroll

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans for eligible borrowers are eligible for loan repayment if the loan is paid within an 8 24-week time frame.

  • The First Draw PPP loan requires that the employee and compensation levels are maintained in the exactly the same manner.
  • The loan funds could be used to cover expenses for payroll or other eligible expenses.
  • A minimum of 60% of the profits go towards payroll costs
  • How and when to apply for loan forgiveness?

The borrower is eligible for forgiveness once all loan proceeds to which the borrower wants forgiveness have been utilized. The borrower can apply for forgiveness at any time up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 months of the last day of the covered period and the loan is not renewed, PPP loan payments are no longer deferred and borrowers must make monthly payments to their PPP lender.

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