Student Loan Forgiveness Income Limit

Student Loan Forgiveness Income Limit

The U.S. Small Business Administration has released a 1-page form which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form is also updated with new forms to comply with the most recent stimulus law. 

The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of financing for small-scale businesses looking for forgiven loans to help deal with the financial fallout from the coronavirus pandemic. It included a requirement for the SBA to issue simplified forms within 24 hours after the legislation was approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions meant to encourage more loans from community banks, particularly for minority-owned businesses that were unable to obtain loans in the past.

Student Loan Forgiveness Income Limit

“The Small Business Administration met the requirements to release 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, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released new forms that were updated.”

Terms for forgiveness for the first draw of PPP loans

Student Loan Forgiveness Income Limit – First Draw PPP loans granted to borrowers who meet the criteria are eligible for complete loan forgiveness if they do so within the 8 to 24-week covered period following the loan’s disbursement

  • It’s the same for compensation and employees.
  • The loan proceeds are spent on payroll expenses and other eligible expenses; and
  • At least 60% of profits go towards the cost of payroll

Second Draw PPP Conditions for loan forgiveness

Second Draw PPP loans made to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8– to 24-week duration following the loan’s disbursement

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

Once all of the loan proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers may apply for forgiveness at any time until the date at which the loan matures. If they do not file for forgiveness within 10 years of the end of the period covered, then PPP loans are not deferred any longer, and borrowers will begin making payment to their PPP lender.

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