On Tuesday, October 13, 2020 the U.S. Small Business Administration (SBA) released guidance confirming that the Paycheck Protection Program (PPP) loan forgiveness applications are not due on October 31st, 2020 as originally stated on the loan forgiveness application forms. Instead, anyone who received a PPP loan may submit a loan forgiveness application any time before the maturity date of the loan. The maturity date of the loan will be either two or five years from loan origination depending upon the terms of the loan agreement. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan. The covered period is either (1) the 24-week (168-day) period beginning on the PPP loan disbursement date, or (2) if the borrower received its PPP loan before June 5, 2020, the borrower may elect to use an eight-week (56-day) covered period.
As a reminder, in order to have the full amount forgiven, borrowers must spend at least 60% of their loan on payroll costs and may use the remainder of the funding for other eligible costs, such as mortgage interest, rent and utilities. Also, the amount forgiven may be lowered if your business reduced its employee head count or cut salaries and wages.
If you have any questions regarding your PPP Loan or the forgiveness process, please feel free to give us a call at (404) 365-5682.