For businesses which received PPP1 loans during the early wave of funding, the time to apply for forgiveness is now. The first PPP loan payments are due 10 months after the end of your covered period. For example, if you received a PPP loan on April 17, 2020, your 24-week covered period ended on October 1, 2020 and your first loan payment will be due on August 1, 2021. Your bank will need time to process your application so the time to apply is now.
A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.
Reminders about applying for loan forgiveness:
1. Determine which forgiveness application you will complete: The SBA provides 3 different versions of the PPP loan forgiveness application form, verify with your accountant or bank that you are using the correct form.
2. Gather your documents: There are specific documents you will need to retain and/or submit for your application. If you plan to start gathering documentation on your own, here’s what you may need: payroll documents for all payroll periods that overlapped with the covered period, full-time equivalent (FTE) documents and certain non-payroll documents.
3. Submit the forgiveness form and documentation to your PPP lender: Complete your loan forgiveness application and submit it to your lender with the required supporting documents and follow up with your lender to submit additional documentation as requested. Consult your lender for additional guidance and provide requested documentation in a timely manner.
For those of you receiving PPP2 loans in 2021, the earliest you can apply for loan forgiveness is 8 weeks from your loan funding date.