Student Loan Forgiveness Due To Disability

Student Loan Forgiveness Due To Disability

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

Congress approved the COVID-19 relief package last month and offered $284 billion in funding to small businesses in need of loans. The money was intended to reduce the economic burden of the coronavirus pandemic. It included a requirement for the SBA to issue streamlined forms within 24 hours of the legislation being signed into law to simplify the application process for forgiveness, along with conditions designed to facilitate more bank loans by community banks, particularly for minority-owned businesses who had trouble getting loans last year.

Student Loan Forgiveness Due To Disability

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the obligation to issue the one-page form for PPP loan forgiveness within 24 days of the date of enactment under 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 additional updated forms.”

First Draw PPP Conditions for loan forgiveness

Student Loan Forgiveness Due To Disability – For borrowers who are eligible, First Draw PPP loans are suitable to forgive loans. This happens when the loan payment is made within an 8 to 24-week timeframe.

  • Pay and worker levels are ensured
  • The loan funds are used on payroll and other eligible expenses; and
  • At least 60% of funds go to expenses for payroll

Second Draw PPP Loan Forgiveness Conditions

Second Draw PPP loans for eligible borrowers can be qualified for loan forgiveness when the loan is repaid 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 funds are used on payroll as well as other eligible expenses and
  • Minimum 60% of funds go to payroll costs
  • What is the best time to apply for loan forgiveness

Once all of the loan proceeds have been used the borrower is eligible to be forgiven. The borrower can apply for forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making monthly payments to their PPP lender.

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