Is Student Loan Forgiveness A Good Idea

Is Student Loan Forgiveness A Good Idea

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

The COVID-19 relief package that Congress passed last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help cope with the economic fallout from the coronavirus pandemic. The law required that the SBA provide simplified forms within the first 24 hours after the bill’s passage into law. This is to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans last year.

Is Student Loan Forgiveness A Good Idea

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

First Draw PPP Terms of loan forgiveness

Is Student Loan Forgiveness A Good Idea – For borrowers who are eligible First Draw PPP loans are eligible to forgive loans. This happens when the loan is disbursed within an 8 to 24 week period.

  • This is also true for pay and benefits for employees.
  • The loan funds are used on payroll costs and other eligible expenses; and
  • A minimum of 60% of proceeds are spent on payroll costs

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness when the loan is repaid within an 8 24-week time frame.

  • Pay and worker levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan funds are used on payroll and other eligible expenses; and
  • Minimum 60% of funds go to expenses for payroll
  • How do I apply for loan forgiveness and when to apply

A borrower may apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan are able to receive the loan payment from their PPP lender.

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