Will There Be Student Loan Forgiveness

Will There Be Student Loan Forgiveness

The U.S. Small Business Administration has released a single-page form aimed at simplifying the process of applying to forgive Paycheck Protection Program loans, along with newly revised and updated forms to meet the requirements of the latest stimulus legislation. 

Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses that needed loans. This money was used to mitigate the economic effects of the coronavirus epidemic. It also included a requirement that the SBA to issue streamlined forms within 24 days of the legislation being adopted to make the procedure of applying for forgiveness. It also included conditions designed to facilitate more bank loans by community banks, especially for minority-owned businesses who struggled to get loans last year.

Will There Be Student Loan Forgiveness

“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans within 24 days 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 published new forms.”

Forgiveness terms for the initial draw of PPP loans

Will There Be Student Loan Forgiveness – For eligible borrowers, First Draw PPP loans are suitable to be forgiven. This happens if the loan disbursement occurs within an 8 to 24-week timeframe.

  • Pay and worker levels are ensured
  • The proceeds of the loan can be used to pay the cost of payroll as well as other eligible expenses.
  • A minimum of 60% of profits are spent on payroll costs

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week duration following the loan’s disbursement

  • The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
  • The loan funds can be used to cover the cost of payroll as well as other eligible expenses.
  • Minimum 60% of funds go to payroll costs
  • How do I apply for loan forgiveness and the time to apply

Once all of the loan funds have been utilized the borrower is eligible to be forgiven. The borrower can apply for forgiveness at any point up to the loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the date of expiration of the covered period the PPP loans are not deferred any longer, and the borrower will be required to make monthly payments to their PPP lender.

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