The First PPP Loan Payments Are Coming Due: Here’s What You Need to Know

At a glance:

• The main takeaway: The first Paycheck Protection Program loans (particularly those distributed in spring 2020) are coming due for repayment.
• Impact on your business: You need to understand your forgiveness window and the appropriate applications to request forgiveness, otherwise you’ll have to start making monthly payments of principal and interest.
• Next steps: Rely on Aprio’s experienced and diligent Paycheck Protection Program team for help with navigating the loan forgiveness process.

Schedule a free consultation with our PPP team today.

The full story:

The U.S. Small Business Administration (SBA) stopped issuing new Paycheck Protection Program (PPP) loans in June after distributing roughly $800 billion to small businesses in need throughout the COVID-19 pandemic. The loan proceeds provided the stability and support businesses and their employees needed to make it through the hardest days of the past year.

Of course, like most business loans, PPP loans aren’t a “free lunch;” they come with repayment obligations. If you applied for a PPP loan in spring 2020, your repayment deferral window is closing, and you may need to make payments soon.

Here are a few basic details you need to know.

Loan forgiveness timeline

PPP recipients entered into loan agreements with a repayment deferral period of 10 months from the end of the covered period. As a recap, the covered period begins on the date the loan was originally disbursed. It ends on a date selected by the borrower that is at least eight weeks following the date of the loan disbursement and no more than 24 weeks after the date of the loan disbursement.

For example, if you received a PPP loan on May 17, 2020, with the maximum covered period of 24 weeks ending on October 30, 2020, then you will have until August 30, 2021, to apply for loan forgiveness before repayments become due. Otherwise, you will need to make monthly payments of principal and interest until the settlement of the PPP loan.

Note that PPP borrowers have until the maturity date — which can be either two or five years from the date of your PPP loan — to apply for loan forgiveness. However, if the repayment deferral period we mentioned above lapses, repayment will begin and continue until the SBA and your lender approve your loan forgiveness request.

Understanding the PPP loan forgiveness applications

There are three different types of PPP loan forgiveness applications to choose from:

• Form 3508
• Form 3508EZ
• Form 3508S

Click here to read my previous article about each of these applications and get an in-depth description of their criteria to determine which one makes the most sense for you. Keep in mind that you will need to submit your forgiveness application to the bank that gave you the PPP loan.

The bottom line

Staying on top of the PPP loan forgiveness application process and deadlines can be stressful when you’re already busy managing the daily operations of your business. Fortunately, Aprio is here to help. Our dedicated CARES Act team is deeply experienced in navigating government programs like the PPP and can take the reins on the loan forgiveness process so you can focus on what you do best.

Ready to get started? Schedule a free consultation with our team today.

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.