Obama Student Loan Forgiveness Act

The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to conform to the requirements of the most recent stimulus legislation. 

The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse of the coronavirus epidemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being approved by the lawmaker to streamline the process of applying for forgiveness. The legislation also contained conditions that aim to increase the number of bank loans by community banks, especially for minority-owned businesses that were unable to obtain loans last year.

Obama Student Loan Forgiveness Act

“The Small Business Administration met the requirement to issue the single-page form for loan forgiveness under the PPP 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 released new forms.”

First Draw PPP Conditions for loan forgiveness

Obama Student Loan Forgiveness Act – First Draw PPP loans given to eligible borrowers qualify for total loan forgiveness during the 8- to 24 week period that follows the disbursement of loan:

  • The levels of compensation and employee pay are kept at a constant level.
  • The proceeds of the loan can be used to cover the cost of payroll as well as other eligible expenses.
  • A minimum of 60% of the proceeds are used for the cost of payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans given to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24 week time period after loan disbursement:

  • The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
  • The loan proceeds are spent on payroll and other eligible expenses; and
  • At least 60% of profits are used for the cost of payroll
  • How and when to apply for loan forgiveness?

The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower is requesting forgiveness have been used. Borrowers are able to apply for forgiveness anytime up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months of the end date of the loan are eligible to receive the loan payment from their PPP lender.

Download Obama Student Loan Forgiveness Act

Gallery of Obama Student Loan Forgiveness Act

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