Pros And Cons Of Student Loan Forgiveness Act

The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation. 

Congress approved the COVID-19 relief package last month that offered $284 billion in funding for small-scale businesses who needed loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage community banks to make more loans, especially to minority-owned businesses that had difficulty getting loans last year.

Pros And Cons Of Student Loan Forgiveness Act

“The Small Business Administration met the requirement to issue the one-page form for loan forgiveness under the PPP within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms.”

First Draw PPP Conditions for loan forgiveness

Pros And Cons Of Student Loan Forgiveness Act – First Draw PPP loans granted to eligible borrowers qualify for complete loan forgiveness if they do so within the 8 to 24-week period after the loan’s disbursement

  • The levels of compensation and employee pay are kept at a constant level.
  • The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
  • A minimum of 60% of the profits go towards payroll costs

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans given to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week time period after loan payment:

  • The First Draw PPP loan requires that the employee and the compensation levels be maintained in the exactly the same manner.
  • The loan proceeds are spent on payroll expenses and other expenses that are eligible and
  • A minimum of 60% of the profits are used to pay for payroll expenses
  • How to apply for loan forgiveness , and when

After all loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers can apply for forgiveness at any time prior until the date of maturity of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the covered period, then PPP loan payments can no longer deferred, and borrowers will begin making payment to their PPP lender.

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