Student Loan Forgiveness Unfair

The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, as well as newly updated and revised forms to conform to the requirements of the most recent stimulus legislation. 

The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion of funds for small businesses that want forgiven loans to help to deal with the effects of economic collapse of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the legislation’s signing into law. This was done to make it easier to apply for forgiveness. The legislation also contained conditions that encourage community banks to make more loans specifically to minority-owned companies that had difficulty getting loans last year.

Student Loan Forgiveness Unfair

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to publish the PPP form, which is one page long, for loan forgiveness within the first 24 hours 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 published new forms.”

First Draw PPP Loan forgiveness terms

Student Loan Forgiveness Unfair – First Draw PPP loans given to borrowers who are eligible can be granted total loan forgiveness within the 8-to 24-week period after the disbursement of loan:

  • Employee and compensation levels are kept at a constant level.
  • The loan proceeds are used on payroll costs and other eligible expenses; and
  • At least 60% of proceeds are used to pay for payroll expenses

Second Draw PPP Loan Forgiveness The terms

Second Draw PPP loans to eligible borrowers can be eligible for loan repayment if the loan is paid within an 8 24 week time frame.

  • Employee and compensation levels are maintained in the same manner in accordance with the First Draw PPP loan
  • The loan funds are used on payroll costs as well as other eligible expenses and
  • At least 60% of proceeds are used for the cost of payroll
  • How and when to apply for loan forgiveness

A borrower may apply for forgiveness after all loan proceeds for which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness any time up to the maturity date of the loan. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the period covered the PPP loans are not deferred any longer, and the borrower will be required to make payment to their PPP lender.

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