Start Fresh Student Loan Forgiveness

The U.S. Small Business Administration has issued a one-page form that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus legislation. 

Congress approved the COVID-19 relief package last month, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to offset the economic impact of the coronavirus epidemic. The law 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 would encourage banks in the community to lend more specifically to minority-owned companies that had difficulty getting loans last year.

Start Fresh Student Loan Forgiveness

“The Small Business Administration met the requirement of releasing the one page form for loan forgiveness under the PPP by 24 days after the date of enactment 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 published updated forms.”

Forgiveness terms for the first draw of PPP loans

Start Fresh Student Loan Forgiveness – First Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if within the 8-to 24-week period after the disbursement of loan:

  • The levels of compensation and employee pay are kept at a constant level.
  • The loan funds are used on payroll as well as other expenses eligible for reimbursement; and
  • A minimum of 60% of the funds go to payroll costs

Second Draw PPP Terms of Loan Forgiveness

Second Draw PPP loans for eligible borrowers can be eligible for loan repayment when the loan is paid within an 8 24-week period.

  • 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 the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of the proceeds are used for the cost of payroll
  • How do I apply for loan forgiveness , and when to apply

The borrower is eligible for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the date of expiration of the time period that was covered the PPP loans are not deferred any longer, and borrowers must make payment to their PPP lender.

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