Is There Debt Forgiveness For Student Loans

The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms that are in line with the most recent stimulus law. 

Congress approved the COVID-19 relief package in the month of March that provided $284 billion of funding for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. The law requires that the SBA issue simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. It also included conditions that would encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.

Is There Debt Forgiveness For Student Loans

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 24 days of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued more updated forms.”

First Draw PPP Terms of loan forgiveness

Is There Debt Forgiveness For Student Loans – For borrowers who are eligible First Draw PPP loans can be qualified to forgive loans. This is when the loan is disbursed within an 8 to 24-week timeframe.

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

Second Draw PPP Loan Forgiveness Conditions

Second Draw PPP loans to qualified borrowers can be qualified for loan forgiveness if the loan is paid within an 8 24-week period.

  • Employee and compensation levels are maintained in the same way in accordance with the First Draw PPP loan
  • The proceeds of the loan could be used to cover the cost of payroll as well as other eligible expenses.
  • A minimum of 60% of the proceeds go to the cost of payroll
  • How and when to apply for loan forgiveness

The borrower is eligible for forgiveness once all loan proceeds to which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any time until the loan’s maturity date. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loans are no longer deferred and borrowers will begin making payment to their PPP lender.

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