Reasons Why Student Loans Should Be Forgiven

The U.S. Small Business Administration has issued a one-page form that makes it easier to apply for the cancellation of Paycheck Protection Program loans. It also includes newly revised forms that are in line with the latest stimulus legislation. 

Congress approved the COVID-19 relief package last month that provided $284 billion of funding for small-scale businesses who needed loans. The funds were used to offset the economic impact of the coronavirus outbreak. The law required that the SBA release simplified forms within 24 hours of the legislation’s signing into law. This was to simplify the process of applying for forgiveness. It also included conditions to encourage community banks to make more loans, especially to minority-owned businesses who had a difficult time getting loans last year.

Reasons Why Student Loans Should Be Forgiven

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

First Draw PPP Terms of loan forgiveness

Reasons Why Student Loans Should Be Forgiven – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness during the 8- to 24-week covered period following the loan’s disbursement

  • The same goes for the compensation and employees.
  • The loan funds are used on payroll expenses and other eligible expenses; and
  • At least 60% of proceeds are used to pay for payroll expenses

Second Draw PPP Conditions for loan forgiveness

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

  • The First Draw PPP loan requires that the employee and compensation levels be maintained in the exactly the same manner.
  • The proceeds of the loan could be used to pay for the cost of payroll as well as other expenses that are eligible.
  • At least 60% of profits go towards payroll costs
  • What is the best time to apply for loan forgiveness

When all of the loan proceeds have been used The borrower may apply to be granted forgiveness. The borrower can request forgiveness anytime up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are able to receive loan payments from their PPP lender.

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