Is Student Loan Debt Forgiven Upon Death

Is Student Loan Debt Forgiven Upon Death

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. It also includes newly revised forms that are in line with the current stimulus law. 

The COVID-19 aid package Congress passed last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them cope with the economic fallout from the coronavirus outbreak. It included a requirement for the SBA to issue streamlined forms within 24 days of the legislation being signed into law to simplify the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, specifically for minority-owned businesses that were unable to obtain loans in the past.

Is Student Loan Debt Forgiven Upon Death

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

Forgiveness terms for the initial draw of PPP loans

Is Student Loan Debt Forgiven Upon Death – First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:

  • It’s the same for compensation and employees.
  • The loan proceeds are used on payroll expenses as well as other expenses eligible for reimbursement; and
  • At least 60% of profits are used to pay for payroll expenses

Second Draw PPP Loan Forgiveness Conditions

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

  • The First Draw PPP loan requires that the employee and the compensation levels are maintained in the exact same way.
  • The loan proceeds are spent on payroll and other expenses that are eligible and
  • A minimum of 60% of the profits go towards payroll costs
  • What is the best time to apply for loan forgiveness

When all of the loan’s proceeds have been used, a borrower can apply to be granted forgiveness. Borrowers may apply for forgiveness at any point up to the loan’s maturity date. If borrowers do not apply for forgiveness within 10 month of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.

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