If you received a PPP loan in 2020, you may soon need to start making payments on that loan. This applies to borrowers who did not apply for forgiveness within ten months of the end of their covered period. In that case, those borrowers will have to start paying the loan back at 1% interest over the remaining term of the loan; until they either apply for forgiveness and the Small Business Administration (SBA) decides on forgiveness, or the loan is paid back.
For example, suppose you received a PPP loan on April 1, 2020, and elected to use 24 weeks for your covered period. In that case, you are facing a deadline of July 16, 2021, before your loan payments will begin. If you apply for forgiveness before payments start, payments will continue to be deferred until the SBA makes a forgiveness decision about your loan. If you do not submit a loan forgiveness application to your lender by this date, you must begin making payments on or after July 16 as the loan payments are no longer deferred.
You can still apply for forgiveness after ten months, but you can no longer defer making loan payments. If you do apply and receive full forgiveness before the maturity date of the loan, but after ten months from the end of your covered period, any payments made on the loan will be refunded back to you (but it is in your best interest to apply for forgiveness before you have to start making payments).
The deadline to apply for forgiveness is either two years or five years from the date the loan was received. For any loans received before June 5, 2020, the term is 2 years unless the bank and the borrower agree to change it to five years. For any loans issued after June 5, the loan maturity is five years.
ALL Can Help with PPP Loan Forgiveness
If you’re too busy or unsure how to complete your forgiveness application, we can help. ALL’s dedicated Paycheck Protection Program team can help you:
- Select the right forgiveness application for your business
- Document the necessity of your loan
- Create a strategy to maximize forgiveness and fully leverage other credits and incentives
Learn more about our PPP & ERC consulting services here. If you have any questions please reach out to us or contact your ALL advisor.
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