What Is Considered Public Service For Student Loan Forgiveness

The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the current stimulus law. 

Congress approved the COVID-19 relief package in the month of March and included $284 billion of financing to small businesses in need of loans. This money was used to reduce the economic burden of the coronavirus epidemic. The law required that the SBA provide simplified forms within the first 24 hours of the signing into law. This is to facilitate the application for forgiveness. It also included conditions that encourage community banks to make more loans specifically to minority-owned companies who had a difficult time getting loans last year.

What Is Considered Public Service For Student Loan Forgiveness

Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within 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 issued more updated forms.”

Terms for forgiveness for the initial draw of PPP loans

What Is Considered Public Service For Student Loan Forgiveness – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if during the 8- to 24-week covered period following the disbursement of loan:

  • Employee and compensation levels are maintained
  • The loan proceeds are spent on payroll and other eligible expenses; and
  • At least 60% of proceeds are used for the cost of payroll

Second Draw PPP Loan forgiveness terms

Second Draw PPP loans for eligible customers are eligible for loan forgiveness when the loan is repaid within an 8 24 week time frame.

  • The levels of compensation and employee pay are maintained in the same way as required for the First Draw PPP loan
  • The loan funds are used on payroll costs and other expenses that are eligible and
  • A minimum of 60% of the profits go towards the cost of payroll
  • How to apply for loan forgiveness , and when

The borrower is eligible for forgiveness after the loan’s proceeds for which the borrower wants forgiveness have been used. The borrower can request forgiveness anytime up to the maturity date of the loan. If they do not file for forgiveness within 10 months of the date of expiration of the covered period, then PPP loan payments can no longer deferred and the borrower will be required to make loan payments to their PPP lender.

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