Student Loan Forgiveness As A Teacher

The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation. 

The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The law requires that the SBA issue simplified forms within 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. The legislation also contained conditions that would encourage community banks to lend more, especially to minority-owned businesses who had a difficult time getting loans in the past.

Student Loan Forgiveness As A Teacher

“The Small Business Administration met the requirement of releasing the single-page form for the forgiveness of PPP loans within 24 hours of the date of enactment of 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 issued updated forms.”

Forgiveness terms in the first draw of PPP loans

Student Loan Forgiveness As A Teacher – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24 week period that follows the loan’s disbursement

  • The same goes for the pay and benefits for employees.
  • The loan funds are used on payroll costs as well as other expenses eligible for reimbursement; and
  • At least 60% of funds go to expenses for payroll

Second Draw PPP Loan Forgiveness Conditions

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

  • The levels of compensation and employee pay are maintained in the same manner as required for the First Draw PPP loan
  • The loan funds can be used to pay payroll costs or other eligible expenses.
  • At least 60% of funds go to expenses for payroll
  • How and when to apply for loan forgiveness

A borrower can apply for forgiveness after all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can request forgiveness at any time up to the date of maturity. If they do not file for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred and the borrower will be required to make loan payments to their PPP lender.

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