Student Loan Forgiveness For Frontline Health Workers Act

Student Loan Forgiveness For Frontline Health Workers 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 also contains newly updated forms to comply with the latest stimulus law. 

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 mitigate the economic effects of the coronavirus pandemic. It also included a requirement that the SBA to issue simplified forms within 24 hours of the bill being approved by the lawmaker to streamline the application process for forgiveness. The legislation also contained conditions meant to encourage more bank loans by community banks, specifically for minority-owned businesses who struggled to get loans last year.

Student Loan Forgiveness For Frontline Health Workers Act

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, stated that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms that were updated.”

Terms for forgiveness for the initial draw of PPP loans

Student Loan Forgiveness For Frontline Health Workers Act – For borrowers who are eligible, First Draw PPP loans are eligible for loan forgiveness. This happens when the loan is disbursed within an 8 to 24 week period.

  • This is also true for compensation and employees.
  • The loan funds are used on payroll expenses and other expenses that are eligible and
  • Minimum 60% of funds go to the cost of payroll

Second Draw PPP Loan forgiveness terms

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

  • Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
  • The loan funds are used on payroll costs and other eligible expenses; and
  • At least 60% of profits go towards payroll costs
  • What is the best time to apply for loan forgiveness?

The borrower is eligible for forgiveness after all loan proceeds to which the borrower has applied for forgiveness have been utilized. Borrowers are able to apply for forgiveness anytime up until the date of maturity of the loan. If the borrower does not apply for forgiveness within 10 months of the last day of the time period that was covered the PPP loans are no longer deferred and the borrower will be required to make payment to their PPP lender.

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