Student Loan Forgiveness Tax Form

The U.S. Small Business Administration has released a form of one page that simplifies the application for the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus legislation. 

Congress approved the COVID-19 relief package last month, which provided $284 billion of funding for small-scale businesses who needed loans. This money was used to mitigate the economic effects of the coronavirus pandemic. The law required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to make it easier to apply for forgiveness. Additionally, it included conditions to encourage community banks to lend more specifically to minority-owned companies who had a difficult time getting loans in the past.

Student Loan Forgiveness Tax Form

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the one-page PPP form loan forgiveness within the first 24 hours of the date of enactment in 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 the updated forms.”

Forgiveness terms for the initial draw of PPP loans

Student Loan Forgiveness Tax Form – For eligible borrowers First Draw PPP loans can be suitable to be forgiven. This is if the loan disbursement occurs within an 8 to 24 week period.

  • The levels of compensation and employee pay are maintained
  • The loan funds are used on payroll and other expenses that are eligible and
  • At least 60% of proceeds go to payroll costs

Second Draw PPP Loan Forgiveness Conditions

Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week time period after loan disbursement:

  • Pay and worker levels are maintained in the same way as required for the First Draw PPP loan
  • The loan proceeds are used on payroll expenses as well as other eligible expenses and
  • At least 60% of proceeds are spent on payroll costs
  • When and how do I apply for loan forgiveness

When all of the loan proceeds have been used The borrower may apply to be forgiven. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 years of the end of the period covered, then PPP loans are no longer deferred and the borrower will be required to make loan payments to their PPP lender.

Download Student Loan Forgiveness Tax Form

Gallery of Student Loan Forgiveness Tax Form

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