Student Loan Forgiveness Act

The U.S. Small Business Administration has released a 1-page form that simplifies the application for forgiveness of Paycheck Protection Program loans. The form is also updated with new forms to comply with the latest stimulus law. 

The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion in funding for small businesses seeking forgiveness loans to help them cope with the economic fallout from the coronavirus pandemic. The law requires that the SBA provide simplified forms within 24 hours of the signing into law. This is to facilitate the application for forgiveness. The legislation also contained conditions to encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans in the past.

Student Loan Forgiveness Act

“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of 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 initial draw of PPP loans

Student Loan Forgiveness Act – First Draw PPP loans granted to borrowers who meet the criteria are eligible for total loan forgiveness within the 8-to 24-week covered period following the loan’s disbursement

  • The same goes for the employee compensation and the.
  • The loan proceeds can be used to pay for the cost of payroll as well as other eligible expenses.
  • At least 60% of proceeds go to the cost of payroll

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans to qualified borrowers are eligible for loan repayment if the loan is paid within an 8– to 24-week time frame.

  • The First Draw PPP loan requires that the employee and compensation levels be maintained in an exact same way.
  • The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
  • A minimum of 60% of the funds go to the cost of payroll
  • How and when to apply for loan forgiveness?

A borrower may apply for forgiveness only after all loan proceeds for which the borrower wants forgiveness have been utilized. Borrowers can apply for forgiveness at any time prior to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 month after the date they will be able to repay the loan will be able to receive loan payments from their PPP lender.

Download Student Loan Forgiveness Act

Gallery of Student Loan Forgiveness Act

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