Sallie Mae Private Loan Forgiveness

Sallie Mae Private Loan Forgiveness

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

The COVID-19 relief plan that Congress passed last month revived the PPP with $284 billion in funding for small businesses seeking forgiven loans to help cope with the economic fallout of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. The legislation also contained conditions that encourage community banks to make more loans, especially to minority-owned businesses who were unable to obtain loans last year.

Sallie Mae Private Loan Forgiveness

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 in 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 updated forms.”

Forgiveness terms for the first draw of PPP loans

Sallie Mae Private Loan Forgiveness – For those who qualify, First Draw PPP loans can be qualified for loan forgiveness. This is when the loan payment is made within an 8 to 24-week timeframe.

  • Employee and compensation levels are kept at a constant level.
  • The proceeds from the loan may be used to pay expenses for payroll or other eligible expenses.
  • Minimum 60% of funds go to the cost of payroll

Second Draw PPP Conditions for loan forgiveness

Second Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8to 24 week time period after the loan’s disbursement

  • The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
  • The loan funds can be used to pay payroll costs or other expenses that are eligible.
  • Minimum 60% of proceeds go to payroll costs
  • What is the best time to apply for loan forgiveness?

The borrower is eligible for forgiveness only after all loan proceeds to 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 the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loan payments can not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.

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