Student Loan Forgiveness After Consolidation

Student Loan Forgiveness After Consolidation

The U.S. Small Business Administration has issued a one-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. It also includes newly revised forms to comply with the latest stimulus legislation. 

Congress approved the COVID-19 relief package in the month of March that included $284 billion of financing for small-scale businesses who needed loans. The funds were used to reduce the economic burden of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within 24 days after the legislation was signed into law to simplify the procedure of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who were unable to obtain loans last year.

Student Loan Forgiveness After Consolidation

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and stated that the Small Business Administration fulfilled the requirement to publish the one-page form for PPP loan forgiveness within 24 days from the date of enactment in the Consolidated Appropriations Act, 20,21. This was published on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued the updated forms.”

Forgiveness terms in the initial draw of PPP loans

Student Loan Forgiveness After Consolidation – For those who qualify First Draw PPP loans can be suitable to be forgiven. This applies when the loan payment is made within an 8 to 24-week timeframe.

  • Pay and worker levels are ensured
  • The loan proceeds are spent on payroll expenses and other expenses that are eligible and
  • A minimum of 60% of the proceeds are spent on payroll costs

Second Draw PPP Loan forgiveness terms

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

  • The levels of compensation and employee pay are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan funds are used on payroll as well as other eligible expenses and
  • A minimum of 60% of the proceeds go to the cost of payroll
  • How do I apply for loan forgiveness , and when

A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been used. The borrower can request forgiveness at any time prior until the date of maturity of the loan. If borrowers do not apply for forgiveness within 10 years of the last day of the time period that was covered the PPP loan payments can not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.

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