Parent Student Loan Forgiveness

The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that conform to the requirements of the latest stimulus legislation. 

The COVID-19 aid package Congress passed last month revived the PPP with $284 billion of funding for small businesses seeking forgivable loans to help them cope with the economic fallout from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within the first 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. It also included conditions that aim to increase the number of bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans in the past.

Parent Student Loan Forgiveness

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and said that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also published new forms.”

Forgiveness terms in the initial draw of PPP loans

Parent Student Loan Forgiveness – For eligible borrowers First Draw PPP loans can be eligible to be forgiven. This is if the loan disbursement occurs within an 8 to 24-week period.

  • The levels of compensation and employee pay are maintained
  • The loan funds are used on payroll expenses and other expenses that are eligible 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 to eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8 24 week time frame.

  • Pay and worker levels are maintained in the same way in accordance with the First Draw PPP loan
  • The loan proceeds are used on payroll expenses as well as other eligible expenses and
  • Minimum 60% of funds go to expenses for payroll
  • When and how do I apply for loan forgiveness

A borrower may apply for forgiveness only after all loan proceeds to which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. Borrowers who do not request forgiveness within 10 months of the expiration date of the loan will be able to receive payment from their PPP lender.

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