When Can You Apply for PPP Loan Forgiveness?|
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As many PPP loan recipients are nearing the end of their 24-week Covered Period, we have observed an increased level of uncertainty and concern about when and how to apply for loan forgiveness. Banks of all sizes have been hesitant to begin accepting loan forgiveness applications. While many are rolling out invitations to apply in phases, others are not accepting applications at all.
We know this uncertainty has been stressful, but we want to remind you that on June 22, 2020, the SBA released the Interim Final Rule on Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule, which provides the opportunity for borrowers to apply for loan forgiveness any time on or before their loan maturity date.
Below is a summary of the important dates to keep in mind when preparing to apply for loan forgiveness
PPP Loan Forgiveness Milestones
|Loans Originated BEFORE JUNE 5||Loans Originated AFTER JUNE 5|
|The 24-week (168 day) period beginning on the date the PPP loan proceeds were disbursed. Borrowers can elect to choose the 8-week (56 day) period beginning on the date the PPP loan proceeds were disbursed.||The 24-week (168 day) period beginning on the date the PPP loan proceeds were disbursed.|
|A Borrower can apply for forgiveness at any time on or before the loan maturity date.||A Borrower can apply for forgiveness at any time on or before the loan maturity date.|
Determination on Forgiveness
|The Lender must issue a decision to the SBA on a loan forgiveness application not later than 60 days after receipt of a complete loan forgiveness application from the Borrower. The SBA then has 90 days to make their decision and notify the Lender.||The Lender must issue a decision to the SBA on a loan forgiveness application not later than 60 days after receipt of a complete loan forgiveness application from the Borrower. The SBA then has 90 days to make their decision and notify the Lender.|
Repayment of Unforgiven Portion
|Repayment of principal and interest begins on the earlier of 10 months after the last day of the Covered Period or when the SBA remits the loan forgiveness funds to the Lender.||Repayment of principal and interest begins on the earlier of 10 months after the last day of the Covered Period or when the SBA remits the loan forgiveness funds to the Lender.|
|2 years. The Borrower and Lender may mutually agree to extend to 5 years||5 years|
* Borrowers with a bi-weekly (or more frequent) pay cycle may elect to use the Alternative Payroll Covered Period which begins on the first day of the first pay Period after the date of the PPP loan disbursement. The Alternative Payroll Covered Period applies to payroll costs only.
As you can see, even though your financial institution may not be accepting loan forgiveness applications, you have time to adequately gather the required documentation and prepare for submitting your application in a completed manner.
Let Aprio Help
Aprio has established a dedicated PPP loan forgiveness team that is continuously monitoring new guidance from the SBA, as well as the Treasury, Congress, and the IRS, to ensure we have the latest information when advising our clients.
If you would like to discuss how to accurately complete your forgiveness application to maximize PPP loan forgiveness, contact Aprio’s dedicated PPP loan forgiveness team for a consultation.
Disclaimer for services provided relative to SBA programs and the CARES Act
Aprio’s goal is to provide the most up to date information, along with our insights and current understanding of these programs and regulations to help you navigate your business response to COVID-19.
The rules regarding SBA programs are constantly being refined and clarified by the SBA and other agencies In certain instances, the guidance being provided by the agencies and/or the financial institutions is in direct conflict with other competing guidance, regulations and/or existing laws.
Due to the evolving nature of the situation and the lack of final published rules, Aprio cannot guarantee that additional changes or updates won’t be needed or forthcoming and the original advice given by Aprio may be affected by the evolving nature of the situation.
You need to evaluate and draw your own conclusions and determine your Company’s best approach relative to participation within these programs based on your Company’s specific circumstances, cash flow forecast and business strategy.
In situations where resources are provided by third parties, those services should be covered under a separate agreement directly with that service provider. Aprio is not responsible for the actions of any other third party.
Aprio encourages you to contact your legal counsel to address the legal implications of the impact of the CARES Act and specifically your participation in any of the SBA programs.